Dollar treads water as Fed hike bets pared on benign US inflation
Economic Times 52 min ago·13 Aug 2026, 5:14 am
The US dollar index paused its recent gains on Thursday as new data showed US inflation remained stable. This unexpected stability has led traders to reduce their expectations for an immediate interest rate hike by the Federal Reserve. Consequently, the dollar is trading flat, though it is still set for a weekly increase.
For the broader market, this shift in Fed expectations is significant. Lower odds of a rate hike can weaken the dollar, which often benefits emerging markets and commodities. It also suggests the central bank may be in no rush to tighten policy, potentially keeping global liquidity relatively loose for the time being.
Investors should watch upcoming US economic releases closely. If inflation data continues to show signs of cooling, the dollar could face further pressure. Conversely, any signs of a resurgence in price pressures could bring rate hike hopes back into focus.
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