Dollar dips before U.S. inflation data

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NEW YORK (Businesshala) – The dollar index plunged into choppy trading on Tuesday as investors awaited data on Wednesday that will be the next leading indicator of whether rising price pressure is intensifying.

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US producer prices rose solidly in October, data showed on Tuesday, indicating that high inflation could persist for some time amid tight supply chains related to the pandemic.

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But ahead of the Consumer Price Index data due on Wednesday morning, traders were backing away from big moves.

“Tomorrow it is going to be in vain to seek any major moves ahead of the US CPI. “After CPI we will see a little more movement on the FX side of things,” said Mazen Issa, senior FX strategist at TD Securities.

He expects it to “print stronger than the consensus on what is already expected to be a fairly hot CPI print.”

Economists polled by Businesshala saw the monthly CPI accelerate to 0.4% from a 0.2% increase in the previous month, the main measure rising 0.3 percentage points year-on-year to 4.3%, surpassing the Fed’s average annual 2% inflation rate. above target.

Fed officials said on Tuesday that it is not clear whether higher inflation will increase further than previously expected.

San Francisco Fed President Mary Daly said it would be in the middle of 2022 before there was more clarity on the employment and inflation outlook, and Minneapolis Fed Chair Neil Kashkari said he believes the forces that are currently Keeping people out of the labor market and raising prices proves to be temporary.

The dollar index fell 0.11% to 92.948 while the euro rose 0.07% to $1.1594.

Elsewhere, the yen hit a one-month high of 112.73 against the greenback and was last traded at 112.83.

Sterling, hammered last week in the wake of the Bank of England’s surprise decision to keep rates on hold, was little changed that day at $1.3561.

The New Zealand dollar fell 0.51% to $0.7132 after jumping on Monday. It is drawing support from expectations that the Reserve Bank of New Zealand may raise rates by 50 basis points later this month.

The risk-sensitive Australian dollar was trading 0.60% lower at $0.7378.

Bitcoin reached a record high of $68,564 before reversing. It was last down 1.15% at $66,791. Ether hit a record high of $4,843.

Reporting by Sinead Carew in New York; Additonal reporting by Stephen Culp and Karen Brettel in New York; Editing by Amelia Sithol-Mataris, Bernadette Baum, Jan Harvey and Dan Grebe

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