SINGAPORE- The dollar held its ground on Wednesday, in spite of downward pressure from lower bond yields and higher stocks, as traders waited on this week’s US consumer price data to see whether it will confirm that inflation is in retreat.
The Australian dollar nudged about 0.3 percent higher to $0.6912 after data showed the annual pace of inflation increased to 7.3 percent in November, leaving room for more rate hikes. The New Zealand dollar also crept up 0.2 percent to $0.6380.
The US dollar was steady elsewhere, loitering just above a seven-month low on the euro at $1.0737 in the lead-up to US inflation data due on Thursday.
The greenback has lost about 11 percent against the common currency since hitting a 20-year peak in September, as investors have started to anticipate easing inflation and with it a falling dollar as the need for more interest rate hikes wanes.
But for the past month or so the common currency has struggled to make headway, and traders have been cautious in selling dollars while the US Federal Reserve continues to promise hikes and the global economic outlook is bleak.
“It’s becoming harder to argue a stronger dollar story, very clearly,” ING chief economist Rob Carnell said.
“But it still remains a difficult one to argue a really strong euro story,” he said, which is holding back wider losses for the dollar as the euro/dollar pair sets the broad tone.
The dollar was steady at 132.23 Japanese yen and $1.2161 per British pound. US government bond yields, which have been attracting investors to the dollar, fell overnight and upbeat sentiment in equities lifted stockmarkets.
Federal Reserve chair Jerome Powell did not give any policy clues during a panel discussion in Stockholm overnight, and with other Fed officials saying their next moves will be data-dependent, investors are keenly focused on US CPI data. – Reuters