The US dollar fluctuated narrowly in the Asian session on Wednesday (August 13), showing relative weakness overall. It is currently trading around 98.03, close to a new low in more than two weeks set overnight. Mild US inflation data released on Tuesday reinforced market expectations of a Federal Reserve interest rate cut next month. Meanwhile, President Trump's attempts to expand his control over US institutions have also put pressure on the dollar.



Inflation data triggers interest rate cuts

Data on Tuesday showed U.S. consumer prices rose only slightly in July, in line with market expectations, as the pass-through effect of Trump's sweeping tariffs on goods prices has so far remained limited.

Investors who are expecting the Federal Reserve to cut interest rates welcomed the data. The market is currently betting that the probability of the Fed cutting interest rates next month is as high as 98%, and this expectation has dragged down the US dollar.
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"The July CPI report suggests a weak pass-through of tariffs on consumer prices... (But) I don't think a September rate cut is as certain as current market pricing suggests," said Carol Kong, a currency strategist at Commonwealth Bank of Australia.

Violent bond market fluctuations

As the latest non-farm payroll data shows, a single report can be enough to change the direction of policy. Therefore, we should remain on the sidelines until the remaining data is released, and it is not appropriate to make a premature conclusion on whether the Fed will choose to cut interest rates or remain on hold.

Affected by the rising expectations of interest rate cuts, U.S. Treasury yields also fell: the two-year yield was last reported at 3.7371%, down more than 1% on Tuesday; the ten-year yield fluctuated slightly at 4.2965%.

The ultimate showdown between the White House and the Federal Reserve

WASHINGTON (Reuters) - President Donald Trump is considering filing a lawsuit against Federal Reserve Chairman Jerome Powell over his management of renovations at the central bank's Washington headquarters, White House spokeswoman Carolyn Levitt said on Tuesday, as Trump again seeks to undermine the Fed's independence and undermine investor confidence in the dollar.

Trump and Powell have a long-standing feud, and the president has repeatedly publicly criticized the Fed chairman for failing to cut interest rates sooner. The president has also targeted Goldman Sachs CEO David Solomon, accusing the bank of miscalculating its predictions that U.S. tariffs would harm the economy and even questioning his suitability to lead the Wall Street giant.

Market outlook

This trading day has a relatively large number of economic data, but several Federal Reserve officials will deliver speeches, which investors need to pay attention to. In addition, continue to pay attention to news related to the geopolitical situation and international trade situation.

At 13:35 Beijing time, the US dollar index was at 98.06.