By Karen Brettell
NEW YORK (Reuters) -The dollar gained against the Japanese yen but fell against the euro on Tuesday in choppy trading as investors digested U.S. data that showed an increase in consumer prices in June, but not big enough to change expectations on when the Federal Reserve is likely to resume interest rate cuts.
Expectations that U.S. President Donald Trump’s tariff policies will increase price pressures are seen keeping the Fed on hold as policymakers wait to see their impact. Fed Chair Jerome Powell has said he anticipated prices will rise this summer.
“Tariffs are in the data, but it’s not as devastating as many feared,” said Brian Jacobsen, chief economist at Annex Wealth Management in Menomonee Falls in Wisconsin.
Following Tuesday’s data, fed funds traders continue to price in 47 basis points of cuts by year-end, with the first-rate reduction expected in September.
The Consumer Price Index increased 0.3% last month after edging up 0.1% in May. That was the largest gain since January. In the 12 months through June, the CPI advanced 2.7% after rising 2.4% in May.
Economists polled by Reuters had forecast a 0.3% monthly increase and a 2.6% rise on a year-over-year basis.
Excluding the volatile food and energy components, the CPI rose 0.2% in June after edging up 0.1% in the prior month. In the 12 months through June, core inflation was 2.9%, inching up after holding at 2.8% for three straight months.
The euro was last up 0.09% on the day at $1.1674. Against the Japanese yen, the dollar strengthened 0.24% to 148.04.
(Reporting by Karen Brettell; Additional reporting by Chuck MikolajczakEditing by Tomasz Janowski)
