Markets look to EU, US inflation data for pointers on future interest rate decisions
ALBAWABA – The United States (US) Dollar held its grounds as the Japanese Yen slipped ahead of the release of US inflation data later on Wednesday, news agencies reported.
The dollar gained around 0.2 percent against the yen, Reuters reported, to 147.39.
Notably, the yen marked the highest one-day rise in two months on Monday, after the Bank of Japan Governor Kazuo Ueda commented on the country’s negative inflation rate over the weekend.
Ueda’s remarks bolstered the yen, only to slide earlier today, after investors had more time to consider his comments more carefully, Alvin Tan, head of FX strategy at RBC Capital Markets told Reuters.
"The statement to our mind was quite a conditional one, (Ueda) didn't promise anything," he said.
US inflation reduces the value of the dollar, which is why the federal reserve raises interest rates - Shutterstock
Influential ruling party lawmaker Hiroshige Seko on Tuesday consolidated the investor’s concerns, also signalling his preference for ultra-loose monetary policy, according to Reuters.
Data released earlier on Wednesday showed Japan's annual wholesale inflation slowed in August for an eighth straight month, although, at 3.2 percent, it remains above the central bank's 2 percent target.
The Pound Sterling slipped 0.05 percent to $1.2489, while the Australian dollar fell 0.03 percent to $0.6408, as reported by Reuters.
The US dollar index, which measures the greenback against a basket of rivals, was steady at 104.61, after slipping to a one-week low on Monday and clocking its largest daily fall in two months.
Reuters’ analysts attributed the slide to an unwinding of long dollar positions after a recent run of resilient US economic data.
In Europe, the euro was flat at $1.0753, after hitting a one-week high of $1.0777 in the previous session as markets raised their bets on further rate hikes from the European Central Bank (ECB).
Wednesday's US inflation data, namely the consumer price index (CPI) data for August, comes just a week before Federal Reserve’s monetary policy meeting to decide on further interest rate hikes. Headline CPI is expected to accelerate by 0.6 percent compared to 0.2 percent a month ago, and by 3.6 percent on an annual basis, according to Reuters.
