FX.co ★ Dollar Falls After CPI Report

The dollar index declined to 98.8 on Friday following the release of key U.S. inflation data, which came in below expectations. This development has bolstered expectations that the Federal Reserve will implement interest rate cuts both in the upcoming week and once more in December. Market participants are forecasting nearly a 99% likelihood of a 25 basis point reduction in rates next week, with similar expectations for December. The unexpectedly low inflation figures have reinforced belief that inflationary pressures, partly due to tariffs, are still under control. However, the release of the Consumer Price Index (CPI) was postponed because of the ongoing government shutdown, which remains unresolved.

Additionally, traders were closely monitoring trade policy news, as President Trump is scheduled to meet with Chinese President Xi Jinping next week, and negotiations with Canada seem to have reached a conclusion. In currency markets, the U.S. dollar experienced a slight decrease against the euro, the British pound, and the Australian dollar, but saw a minor increase against the Canadian dollar. Despite these movements, the dollar has appreciated approximately 0.5% over the week.