USD mixed as Fed rate cut expectations shift post-inflation data

The US dollar showed mixed performance as markets repriced Federal Reserve rate cut expectations following recent inflation reports. Initially, the Fed pricing turned hawkish after CPI data, reducing year-end cut expectations to 45 basis points, but subsequent PPI figures reversed this sentiment, returning to pre-inflation levels. The Bank of England saw similar volatility, with hot UK CPI initially reducing cut expectations before stabilizing at 51 basis points by year-end. Other major central banks show varied expectations: RBA leads with 66 basis points of cuts priced, while the ECB shows only 24 basis points. The Bank of Japan remains the outlier with 16 basis points of hikes expected. This repricing reflects ongoing uncertainty about the global disinflation trajectory and central bank policy divergence, creating volatile trading conditions across major currency pairs as traders adjust positions based on shifting monetary policy outlooks.