The dollar rallied on Friday but was set for a weekly drop as traders weighed improving U.S. inflation data against comments from Federal Reserve officials who cautioned the battle against rising prices is far from over. U.S. import prices declined for the first time in seven months in July on lower costs for both fuel and non-fuel products, data showed on Friday, in the third report this week to hint inflation may have peaked.
Another two key inflation measures, for consumer prices and producer prices, cooled in July, data on Wednesday and Thursday showed, prompting traders to pare back views that the Fed will raise interest rates by 75 basis points for a third consecutive time when it meets in September. The dollar dropped more than 1% after Wednesday’s consumer price index data, but has reversed some of those losses and is on track for a 0.8% decline for the week.
“While the improvement in inflation dealt the dollar a setback this…
