The dollar index initially dipped before recovering to erase previous day’s losses following the near-forecast U.S.

consumer price inflation (CPI) announcement.

The expected CPI increase on all items and core by just 0.2% from the previous month initially plummeted Treasury yields, hence extending the dollar’s earlier risk-on driven losses against the euro and other currencies.

Hawkish remarks from San Francisco Federal Reserve Bank President Mary Daly contributed to the dollar steadying alongside Treasury yields after they further surged after a poorly received 30-year Treasury auction.

The euro relinquished its initial gains, while the USD/JPY moved from intraday lows towards the highs expected in 2023.

The yen’s weakness was fuelled by Japanese wholesale prices hitting their lowest since March 21st, rendering intervention by the Bank of Japan (BoJ) or the Ministry of Finance (MoF) unnecessary.

The sterling’s initial advances gave way to a 0.3% loss, dogged by the weakest RICS house price balance since 2009 and fears that the Bank of England’s (BoE) ultimate rate hikes may be succeeded by an economically painful slackening that may negate sterling support from declining Fed rates.

All eyes now turn to the impending U.S.

retail sales report.