U.S. Dollar Slips as Inflation Data Fuels Rate Cut Expectations

The U.S. dollar weakened on Thursday, driven by rising speculation of a potential Federal Reserve interest rate cut in September. This comes in response to June's consumer price inflation data showing a surprising decrease. According to the Labor Department, the consumer price index (CPI) fell by 0.1% in June, against expectations of a 0.1% increase. Core consumer prices, excluding food and energy, edged up by just 0.1%, missing the forecasted 0.2% rise.

Year-over-year, consumer price growth slowed to 3% in June from 3.3% in May, while core price growth eased to 3.3% from 3.4%, both figures slightly underperforming market expectations. In addition, first-time claims for unemployment benefits significantly decreased, with claims falling to 222,000, a drop of 17,000 from the previous week's revised level of 239,000, surpassing the expected decline to 236,000.

Following the release of this data, the dollar index dropped to 104.08, later recovering slightly to 104.48, but still ending the day down by about 0.55%.