SINGAPORE- The US dollar hovered near its lowest levels of the year on Wednesday as traders hung on to bets that the Federal Reserve would remain steadfast in its easy policy settings ahead of data expected to show a sharp rise in annual US inflation.
Analysts forecast figures show a 3.6 percent lift in year-on-year prices, boosted by last April’s low base. The month-on-month forecast is for a modest 0.2 percent rise.
Higher numbers might add pressure on the Fed to bring forward rate rises, a worry which has contributed to a selloff in rate-sensitive tech shares this week. But currency markets have been soothed by repeated promises of patience from Fed speakers and the dollar has been pressured by gains in commodity currencies.
The greenback touched its weakest in two months against the euro overnight, following a strong European growth survey, and it traded just above that level at $1.2140 early in Asia.
The yen fell marginally to 108.79 per dollar.
Sentiment helped the dollar index a fraction higher to 90.278 as selling pressure persisted in stock markets, but that still leaves it just above key support around 89.677 and 89.206.
Commodity currencies cooled their heels near milestone peaks, with the Aussie and kiwi slipping about 0.2 percent in morning trade to sit just below recent ten-week tops, while the Canadian dollar held just shy of Tuesday’s almost four-year high.
Sterling hung on to recent gains to trade at $1.4118.
“As long as the equity market doesn’t experience a more drastic correction, the dollar is unlikely to get a safe-haven bid,” said Rodrigo Catril, a senior currency strategist at National Australia Bank in Sydney. – Reuters
