Tamer-Than-Expected Inflation Data Weighing On U.S. Dollar

(RTTNews) - The value of the U.S. dollar has shown a substantial move to the downside during trading on Wednesday following the release of tamer-than-expected inflation data.

The U.S. dollar index has slumped by 1.19 points or 1.2 percent to 100.55, tumbling to its lowest level in over a year.

The greenback is trading at 138.46 yen compared to the 140.36 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.1135 compared to yesterday's $1.1009.

The steep drop by the dollar comes following the release of a highly anticipated Labor Department report showing consumer prices increased by less than expected in the month of June.

The Labor Department said its consumer price index rose by 0.2 percent in June after inching up by 0.1 percent in May. Economists had expected consumer prices to climb by 0.3 percent.

Excluding food and energy prices, core consumer prices still increased by 0.2 percent in June after rising by 0.4 percent in May. Core consumer prices were also expected to rise by 0.3 percent.

The report also showed the annual rate of consumer price growth slowed to 3.0 percent in June from 4.0 percent in May. Economists had expected the rate of growth to slow to 3.1 percent.

The annual rate of core consumer price growth also decelerated to 4.8 percent in June from 5.3 percent in May. The rate of growth was expected to slow to 5.0 percent.

While the Federal Reserve is still widely expected to raise interest rates by another quarter point later this month, the data has led to renewed optimism that will be the end of the central bank's rate-hiking cycle.