FOREX-Dollar near one-month low to yen as inflation test looms

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TOKYO, Nov 10 (Businesshala) – The dollar lost three days against key peers and traded near a one-month low of the yen on Wednesday, with highly anticipated U.S. inflation data looming that could reflect the timing of Federal Reserve interest. Could guide rate hike.

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China will also release readings on consumer and producer prices on Wednesday, which could affect policy direction there as the wealth sector crisis threatens the broader economy.

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The dollar index, which measures the greenback against six rivals, was little changed at 93.970, reaching 94.634 on Friday after a gradual retreat from a more than a year’s peak.

The currency was stable at 112.915 yen after falling to 112.73 on Tuesday for the first time since October 11.

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The euro was also flat at $1.15925, maintaining a three-day gain, which has brought it closer to a month’s high of $1.16165.

Economists polled by Businesshala saw October’s US consumer price index 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%, buoyed by the Fed’s Above average annual 2% inflation. aim

“For the dollar index to exit the top of the 94.50 range, we would need to see a 0.8% month-on-month print,” Chris Weston, head of research at brokerage Pepperstone in Melbourne, wrote in a client. pay attention.

While the dollar is trading lower against the yen, “if the US CPI warms it poses a risk to the USDJPY shorts,” he wrote.

Wednesday’s inflation readings from the world’s two largest economies will be the next leading indicator of whether rising price pressures are accelerating globally.

Tuesday’s data showed a solid rise in U.S. producer prices in October, indicating that high inflation could persist for some time amid tight supply chains related to the pandemic.

US Treasury real yields fell sharply on Tuesday as traders raised Treasury Inflation Protected Securities (TIPS) against the prospect of rising prices.

Analysts said rising demand indicated that inflation concerns were taking hold among investors and a broader section of the public.

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

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

Meanwhile, US President Joe Biden met with Fed Governor Lyle Brainard as the potential next Fed chair. He would be considered a dovish pick.

“The potential nomination of Brainard as Fed chair is on[dollars],” the Westpac strategist wrote in a research note.

“Otherwise, the underlying picture remains USD supportive,” he said, “and a decline in the dollar index to mid-93 is a buying opportunity,” he said.

Sterling, hammered last week in the wake of the Bank of England’s surprise decision to keep rates on hold, has held steady this week and last bought $1.3357, higher than Friday’s one-month low of $1.3425.

The risk-sensitive Australian dollar was slightly weaker at $0.73765, not far from the mid-October low of $0.73595 it reached late last week.

In crypto, bitcoin fell below the all-time high of $68,564.40 marked on Tuesday, last changing hands north of $67,000.

Ether was trading at $4,733.03, close to Tuesday’s record high of $4,842.65.

Reporting by Kevin Buckland; Editing by Sam Holmes

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