08:55 AM EDT, 06/12/2024 (MT Newswires) -- US dollar losses built and broadened in early North American trade on Wednesday after government data showed inflation stalling in May, leading markets to bet with increased confidence that the Federal Reserve could cut interest rates in the near future.

EUR/USD and GBP/USD rallied close to 100 points to intraday highs around 1.0822 and 1.2849 respectively, while USD/JPY collapsed more than 100 points to 156.14 and USD/CAD slumped to trade half a percent lower around 1.3685

This was after inflation slowed to a 0% pace MoM in May, undershooting the consensus for a 0.1% increase while pulling the annual rate down to 3.3% from 3.4% previously. The data confirms inflation is once again returning toward the Fed's 2% target.

Core inflation, meanwhile, fell to 0.2% MoM from 0.3% previously when it had been expected unchanged. This pulled the annual rate down to 3.4%, from 3.6%, when it had been expected to fall to only 3.5%.

The rate implied by the September Fed Funds futures contract dipped three basis points to 5.25% following the report, while the rate implied by the December contract fell 10 basis points to 4.94%, implying increased scope for two cuts this year.

The US dollar was quoted lower against all G20 currencies except the Mexican peso, while Europe's high beta G10 currencies like the Swedish krona and Norwegian krone outperformed when building intraday gains of more than one percent.