Dollar Declines Amid Fed Rate Cut Speculation and Trump's Institutional Maneuvers

The dollar weakened after a mild U.S. inflation report raised expectations for a possible Federal Reserve rate cut. Trump's efforts to influence U.S. institutions, including a threat of legal action against Fed Chair Jerome Powell, also impacted investor confidence. Treasury yields fell in response to rate cut anticipation.

The U.S. dollar experienced a downturn on Wednesday following a tame inflation report, leading to predictions of a Federal Reserve rate cut in the coming month. Adding to the dollar's woes were President Trump's intensified attempts to exert control over U.S. institutions, which further weakened investor confidence.

July's consumer price data showed minimal impacts from Trump's tariffs, keeping inflation in line with forecasts and encouraging market participants to factor in a 98% likelihood of a rate cut. Consequently, the dollar's value slumped, with Treasury yields following suit amidst expectations of easing monetary policy.

Meanwhile, Trump's consideration to sue Fed Chair Jerome Powell over central bank renovations and criticism of Wall Street leaders fueled market uncertainty. Sterling showed slight gains, influenced by Britain's fragile job market and wage growth, while the Australian and New Zealand currencies weakened following Australia's rate cut.

(With inputs from agencies.)