FX.co ★ Dollar Set for Weekly Fall

The dollar index held near 100.7 on Friday but remained on course for a weekly loss, as softer-than-expected US inflation data led traders to dial back expectations for imminent Federal Reserve rate hikes. Still, mounting geopolitical tensions between the US and Iran continued to stoke concerns about future price pressures. Washington carried out multiple strikes against Iran this week, and Tehran responded by attacking US bases in neighboring countries.

Earlier in the week, data showed US consumer prices rose less than anticipated in June, while producer prices unexpectedly declined. Retail sales matched forecasts, with lower gasoline prices dragging down fuel station receipts, even as spending at auto dealers and online retailers stayed robust. At the same time, initial jobless claims fell to a two-month low of 208,000. Markets have now largely priced out the likelihood of a Fed rate hike this month, though views remain divided over the chances of a move in September.