Dollar jumps from one-year high ahead of CPI data in search of Fed clues by Reuters

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© Reuters. FILE PHOTO: A photo illustration shows US $ 100 banknotes taken in Tokyo on August 2, 2011. REUTERS / Yuriko Nakao / File Photo

By Kevin Buckland

TOKYO (Reuters) – The dollar retreated from a one-year high against its major peers on Wednesday ahead of U.S. consumer price data that could provide further clues as to when the Federal Reserve reduce its stimulus measures and raise interest rates.

The, which measures the greenback against six rivals, slipped 0.18% to 94.358 from Tuesday, when it touched 94.563 for the first time since late September 2020.

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

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

“The CPI is going to be really important so there might be a bit of positioning before that,” said Joseph Capurso, strategist at the Commonwealth Bank of Australia (OTC 🙂 in Sydney.

“The risk is that inflation will stay high, which would advance market expectations for the timing and pace of rate hikes, and that would support the US dollar. It’s a bit behind today, but I think the dollar has more potential. “

The dollar gained Tuesday amid rising expectations the Fed will announce a cut in stimulus next month, with interest rate hikes next year.

Money markets put the odds of a rate hike at around 50-50 by July, after three Fed policymakers overnight said the US economy had recovered enough to start cutting the central bank’s asset purchase program, including Vice President Richard Clarida.

Meanwhile, a surge in energy prices fueled inflation concerns and fueled bets that the Fed may have to act faster to normalize policy than officials had anticipated.

“CPI is the main economic draw” on Wednesday and “has the potential to see the Fed’s rate hike expectations shift again, one way or another,” said Ray Attrill, chief strategy officer. exchange at the National Australia Bank (OTC 🙂 in Sydney. .

Most Fed policymakers continue to say that inflationary pressures will prove to be transitory.

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

The British pound strengthened 0.19% to $ 1.36135, but remained around the middle of this month’s range.

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

traded around $ 56,200, after hitting a five-month high of $ 57,855.79 earlier this week.

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