US Dollar Index loses traction to near 98.00 as traders ramp up Fed cut bets

• US Dollar Index softens to around 98.00 in Wednesday's early Asian session. 
• Markets ramp up Fed cut bets after softer US July CPI inflation data. 
• Traders brace for the Fedspeak later on Wednesday ahead of US PPI data. 

The US Dollar Index (DXY), an index of the value of the US Dollar (USD) measured against a basket of six world currencies, trades in negative territory near 98.00 during the Asian trading hours on Wednesday. The DXY extends the decline due to the prospect of an imminent Federal Reserve (Fed) rate cut next month and concerns over the US central bank's independence. 

Data released on Tuesday showed cooler-than-expected inflation in the United States (US), prompting traders to raise bets of more interest rate cuts than previously expected this year. Fed funds futures traders are now pricing in nearly a 94% odds of a 25 basis points (bps) cut at the September meeting, up from an 85% chance before the Consumer Price Index (CPI) data release, according to the CME's FedWatch tool. This, in turn, might create a headwind for the US Dollar against its rivals in the near term. 

White House spokeswoman Karoline Leavitt said on Tuesday that US President Donald Trump was considering a lawsuit against Fed Chair Jerome Powell about his management of renovations at the Fed's Washington headquarters. The headline raises concerns over Fed independence and exerts some selling pressure on the USD. 

Traders will take more cues from the speeches from Fed officials later on Wednesday. Chicago Fed President Austan Goolsbee and Atlanta Fed President Raphael Bostic are set to speak. On Thursday, the attention will shift to the US Producer Price Index (PPI) for July. If the report shows a hotter-than-expected outcome, this might help limit the DXY's losses.