FOREX-Dollar eases from one-year high before CPI data as Fed clues sought

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TOKYO, Oct 13 (Businesshala) – The dollar bounced back from a one-year high versus key peers on Wednesday ahead of US consumer price data that could provide additional clues as to when the Federal Reserve will ease stimulus and raise interest rates.

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The dollar index, which measures the greenback against six rivals, slipped 0.18% to 94.358 from Tuesday, when it hit 94.563 for the first time since the end of September 2020.

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The US currency weakened 0.13% to 113.465 yen, down from a three-year high of 113.785 yen in the previous session.

The euro climbed 0.18% to $1.1551 compared to $1.1522 on Tuesday, its lowest in nearly 15 months.

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“The CPI is going to be really important, so there may be a little bit of a situation ahead of that,” said Joseph Caperso, a strategist at the Commonwealth Bank of Australia in Sydney.

“There is a risk of inflation remaining high, and this will bring forward market expectations for the timing and pace of rate hikes, and this will support the US dollar. It’s a little off today but I think the dollar has gained further.”

The dollar rose on Tuesday amid rising hopes the Fed will announce a tapering of stimulus next month, with interest rates rising further.

Three Fed policymakers said overnight that the US economy had recovered enough to begin rolling back the central bank’s asset-buying program, including Vice Chair Richard Clarida, after three Fed policymakers said overnight that the price of money markets would remain low by July. 50-50 growth potential.

Meanwhile, rising energy prices have fueled inflation concerns and raised bets that the Fed may need to move faster than officials to normalize policy.

“The CPI is the main economic draw on Wednesday,” said Ray Attrill, head of foreign exchange strategy at National Australia Bank in Sydney, and “has the potential to see Fed rate hike expectations resurface, one way or another.”

Most Fed policymakers say inflationary pressures will prove to be temporary.

Governors Lyle Brainard and Michelle Bowman are among Fed officials who are due to speak later on Wednesday, when minutes of the central bank’s September meeting are also due to be released.

Sterling gained 0.19% to $1.36135, but remained in the middle of the month’s range.

The Australian dollar fell 0.19% to $0.73375, retreating from Tuesday’s one-month high of $0.7384.

After hitting a five-month high of $57,855.79 earlier in the week, bitcoin traded around $56,200.

Reporting by Kevin Buckland; Editing by Ana Nicolasi da Costa

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