Key facts
- U.S. consumer prices rose 0.1% in July, meeting expectations.
- Money markets reduced the odds of a September Fed rate hike to 40%.
- The dollar index was flat, and the dollar held steady against the yen.
- Asian stocks rose, led by South Korea and Japan.
- Oil prices eased amid lower demand forecasts and ongoing U.S.-Iran deadlock.
The dollar's advance stalled as benign U.S. inflation data led traders to pare back bets for a near-term Federal Reserve interest rate hike. The dollar index was flat, and the greenback held steady against the yen, though it remained on course for a weekly gain. U.S. consumer prices increased 0.1% in July, meeting economists' expectations. Money markets reduced the odds of a September rate hike to 40%. Asian stocks rose, with the MSCI's broadest index of Asia-Pacific shares outside Japan gaining 0.97%, led by South Korea and Japan. Oil prices eased, with U.S. crude falling to $82.58 a barrel and Brent to $88.35, amid lower demand forecasts and ongoing U.S.-Iran deadlock. Wall Street futures inched higher as crude oil prices fell and investors awaited producer-price inflation data. Money market participants saw a 66% chance that the Fed would hold rates steady. Megacap and growth stocks were trading higher, with Alphabet, Amazon and Apple all up. The Nasdaq has rebounded after slumping to more than 10% below its all-time highs.
Interest rate markets saw a slight easing after the CPI print, knocking the chances of a Federal Reserve rate hike next month just below 50%. Short-term Treasuries took some solace, although that didn't prevent the government having to sell 10-year debt at the highest yield in almost 20 years in yesterday's auction. The yield curve from two to 30 years steepened slightly. The next instalment of the overall inflation picture is due today, with the producer price report containing important components of the Fed's favored PCE gauge. Both core and headline PCE inflation are expected to have remained above 3% in July. The rebound in oil prices since July could aggravate August inflation readings. Brent crude was still hovering under $90 per barrel on Thursday amid the ongoing impasse in the Gulf. Japan's wholesale inflation picture also looked elevated, with annual rates still running above 7% in July amid big energy price gains. Britain's economy expanded at a brisk 0.4% in the second quarter of 2026, challenging the narrative of a struggling UK economy.