The U.S. Dollar Fell, In Commodity Markets

While the Fed still has another hike pencilled in for this year, a recent run of soft inflation data has left fund futures <0#FF:> implying only a 40 percent chance of a move by December.

The market's five-year outlook for inflation has been falling steadily and currently stands at a seven-month trough of 2.18 percent USIL5YF5Y=R.

It had spiked as high as 2.52 percent last November in the wake of President Donald Trump's surprise election victory.

This leaves the market vulnerable to any hawkish spin from the Fed, which would likely slug Treasury prices while lifting the embattled U.S. dollar.

The currency could do with the help having taken a fresh knock on Tuesday when the head of Canada's central bank put his own hawkish spin on the outlook for rates there.

The U.S. dollar fell as far as C$1.3209 CAD=, its lowest since Feb. 28, having shed two cents in as many days.

It also lost ground to sterling GBP= after UK inflation data surprised on the high side and amid reports Britain's ruling Conservative Party was likely to sign a deal on Wednesday to form a minority government.

Against a basket of currencies, the dollar barely budged at 96.978 .DXY. It was little changed on the Japanese yen at 110.06 JPY= and the euro at $1.1213 EUR=.

In commodity markets, oil slipped after industry data showed a surprise rise in crude stocks and OPEC reported an increase in its production despite its pledge to cut back. [O/R]
Benchmark Brent crude LCOc1 retreated 35 cents to $48.37 a barrel while U.S. light crude CLc1 shed 42 cents to $46.04.