Dollar Rises as Inflation Data Halts, Fueling Rate Cut Bets: On Thursday, September 12, the U.S. dollar traded near its highest level in four weeks against the euro,
as signs of stability in U.S. inflation boosted expectations
that the Federal Reserve will avoid a significant rate cut next week.

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Meanwhile, the European Central Bank (ECB) is widely expected
to cut interest rates by a quarter of a percentage point later today,
and investors are looking for hints on how close another rate cut might be.

The dollar rose against the yen following a volatile session yesterday.
The U.S. currency dropped by about 1.24% to its lowest level
this year before recovering all its losses after the release of consumer price data.

Early on Wednesday, Junko Nakagawa, a Bank of Japan’s Board of Directors member,
confirmed the bank’s bias toward tightening monetary policy, stating that low real interest rates leave room for further hikes.
Her colleague on the board, Naoki Tamura, said today,
Thursday, that the pace of expected monetary policy tightening in the market might be slower than necessary,
comments that helped ease the yen’s losses.

The dollar rose 0.31% to 142.805 yen after climbing earlier by about 0.41%.
In the previous session, following Nakagawa’s comments, it had fallen to 140.71 yen for the first time since December 28.

The U.S. Consumer Price Index (CPI) rose 0.2% last month, matching the gain seen in July.
Excluding volatile food and energy components, the index rose 0.3%, following a 0.2% increase in the previous month.

As a result, traders have essentially ruled out the possibility of a 50 basis point rate cut on September 18,
leaving the probability at 15%, compared to an 85% chance of a 25 basis point cut.

For the ECB, markets are 100% certain of a quarter-point rate cut today,
as a group of policymakers supports another reduction following a quarter-point cut in June.

The euro stabilized at $1.10165, remaining close to the low,
which reached $1.1002 on Wednesday, its weakest since August 16.

Dollar Rises as Inflation Data Halts, Fueling Rate Cut Bets

Dollar Rises as Inflation Data Halts, Fueling Rate Cut Bets

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