The US dollar strengthened against the Japanese yen but fell slightly against the euro on Tuesday in mixed trading, as investors digested US economic data that showed consumer prices rose in June but not enough to change expectations about when the Federal Reserve (Fed) is expected to resume interest rate cuts.
Expectations that US President Donald Trump's tariff policies will increase price pressures are seen as a factor that will keep the Fed on edge, with policymakers waiting and seeing the impact. Fed Chairman Jerome Powell has previously said he expects prices to rise this summer.
"The impact of tariffs is starting to show in the data, but it's not as big as expected," said Brian Jacobsen, chief economist at Annex Wealth Management in Menomonee Falls, Wisconsin.
Following Tuesday's data, market traders continued to expect a 47 basis point rate cut by the end of the year, with the first cut expected to begin in September.
The Consumer Price Index (CPI) rose 0.3% last month after rising just 0.1% in May, the biggest monthly increase since January. For the 12 months to June, the CPI rose 2.7%, compared with 2.4% in the previous month.
Economists polled by Reuters had expected a monthly increase of 0.3% and an annual increase of 2.6%.
Excluding the volatile food and energy components, the core CPI rose 0.2% in June after rising just 0.1% in the previous month. In the 12 months to June, core inflation rose to 2.9%, slightly up after holding steady at 2.8% for three straight months.
So far, the euro strengthened 0.09% to $1.1674, while the dollar strengthened 0.24% against the Japanese yen to 148.04 yen.
