Dollar retreats from 18-month high despite hot CPI as Fed officials temper hike bets

The dollar retreated from an 18-month high despite hotter consumer-price data, as Federal Reserve officials tempered expectations for further interest-rate increases.

Currency reverses course

The move placed the dollar’s decline against a backdrop of strong CPI data. The currency had recently reached its highest level in 18 months before pulling back.

Fed signals temper rate expectations

Comments from Federal Reserve officials helped moderate bets on additional rate hikes. That shift in expectations coincided with the dollar’s retreat, even as the latest inflation reading remained hot.

The developments highlight the influence of monetary-policy expectations on the currency market. Further direction will depend on how investors interpret inflation data and signals from Fed officials.