The US dollar struggled for direction as investors tried to make sense of the August inflation report that showed the consumer price index (CPI) reaccelerating last month amid higher energy prices. While the report might not be enough to convince the Federal Reserve to raise interest rates again this month, there are some who think the inflation headling number could open the door for a November rate hike.

According to the Bureau of Labor Statistics (BLS), the annual inflation rate climbed to 3.7% in August, up from 3.2% in July. This also came in slightly higher than the market forecast of 3.6%. The month-over-month CPI rose 0.6%.

Core inflation, which strips the volatile energy and food sectors, eased to 4.3% year-over-year, down from 4.7%, and matched economists’ expectations. The monthly core CPI edged up 0.3%, up from 0.2%.

The biggest reason for the uptick in inflation was energy and shelter, with these indexes rising 5.6% and 0.3%, respectively.

Investors will pay close attention to the producer price index (PPI), which is considered a lead for the CPI. The market is projecting a 0.4% increase and a jump to 1.2% year-over-year.

“Today’s uptick in CPI could slightly increase the likelihood of a November interest rate hike and potentially delay the timing of any rate cuts until deeper into 2024,” said Joe Tuckey, head of FX analysis at London-based Argentex Group, a provider of currency risk-management and payment services.

The Federal Reserve will convene its September Federal Open Market Committee (FOMC) policy meeting on Tuesday, and officials are expected to leave the benchmark fed funds rate at the target range of 5.25% and 5.5%.

But the futures market is gradually betting that the central bank could pull the trigger on a quarter-point November rate hike.

US Treasury yields were mostly red midweek, with the benchmark ten-year yield shedding 1.5 basis points to 4.233%. The two-year yield dropped 1.9 basis points to 4.965%, while the 30-year bond slid a single basis point to below 4.33%.

The US Dollar Index (DXY), a gauge of the greenback against a basket of currencies, could not find support at the crucial 105.00 threshold. The index is poised for a modest weekly loss, but it is up more than 1% year-to-date.

The USD/CAD currency pair was unchanged at 1.3547 in Asian trading. The EUR/USD climbed 0.07% to 1.0740, from an opening of 1.0732.