09:41 AM EDT, 05/15/2024 (MT Newswires) -- The US dollar added to earlier losses against its major partner currencies Wednesday, after softening inflation as measured by the consumer price index and underwhelming retail sales prompted a dovish shift in market pricing of the Federal Reserve interest rate outlook.

April's inflation declines may be an early indication of inflation resuming its earlier retreat back toward the Federal Reserve's 2% target, marking the first fall in the annual rate this year and the first moderation of core inflation since February.

The Japanese yen, Swedish krona and Norwegian krone led the extended rally against the dollar after the US Bureau of Labor Statistics said inflation rose 0.3% in April, down from 0.4% and below the consensus for a 0.4% rise. This led the annualized measure to fall to 3.4%, from 3.5% previously, in line with expectations. Core inflation, or the CPI minus food and energy prices, also moderated when rising by 0.3% in April, down from 0.4% previously but in line with expectations. This led the annual measure to fall to 3.6%, from 3.8%, also in line with expectations.

Meanwhile, the Census Bureau said retail sales were unchanged in April following a downwardly-revised 0.6% increase in March, and that core retail sales rose 0.2% following a downwardly-revised 0.9% increase in March. The headline figure was below expectations for a 0.4% increase in April.

Renewed progress toward the inflation target led the yield implied by the December Fed Funds futures contract to fall seven basis points to an intraday low of 4.90% as the market moved closer to pricing in a third anticipated rate cut for the year.

September's contract dipped to 5.16% at the same time, while the implied rate of the June contract was unchanged at 5.32%.

EUR/USD was higher at 1.0857 following the release, but had been as high as 1.0869, while GBP/USD was higher at 1.2643 and USD/CAD was lower at 1.3609. Meanwhile, USD/JPY was lower at 155.23, USD/NOK was lower at 10.7411 and USD/SEK was lower at 10.7435.