Dollar Drops Off 4-Month High as Inflation Fears Recede

The dollar hit just under a four-month peak against major peers on Thursday as currency traders digest data from the previous day showing that US inflation may be flailing.

The dollar index, which measures the performance of the US currency against a basket of six rival currencies, was unchanged at 92.907, after it fell 0.2 percent on Wednesday after a report showed consumer price growth slowed.

The US currency has generally risen since mid-June, reaching its highest level since April 1 at 93,195 before Wednesday’s data, when the Federal Reserve signaled it was preparing to raise interest rates earlier than expected and amid signs that pent-up demand in the recovering economy feeds price increases.

Price increases slowed in July, but overall inflation remains high at historical levels. Inflation also eased in some areas as Fed policymakers indicated that price pressures would prove temporary, such as from used cars.

The euro was stable against the dollar at $1.17390, after recovering from a four-month low of $1.1706 on Wednesday.

The dollar was little changed in general against the yen at 110.405 yen, after dropping off a five-week high of 110.80 hits overnight.