Dollar flat; Aussie slides as inflation slows

The U.S. dollar was barely changed on Wednesday, with resilient economic data easing investor worries over a recession and lifting risk sentiment, though that also indicated that the Federal Reserve may have to continue raising rates.

The Australian dollar fell sharply as consumer inflation eased in May.

Data showed that U.S. consumer confidence increased in June to the highest level in nearly 1-1/2 years, while business spending appeared to hold up in May, indicating the economy remained on solid footing.

Markets are pricing in a 77% probability of a 25 basis point hike by the Fed next month, according to CME FedWatch tool, but no more after that.

Against a basket of currencies, the dollar rose 0.029% to 102.53, after slipping 0.24% overnight. The dollar index is on course to log a decline of about 1.5% for the month.

Rodrigo Catril, senior currency strategist at National Australia Bank, said US data is feeding the theme of ‘sectoral recessions’ playing with different lags, making the Fed’s job to tame inflation harder.

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