TOKYO- The dollar hovered close to a three-month peak on Wednesday in a big week for macroeconomic data that could reveal the path for US monetary policy.
The Australian dollar slipped to a three-month trough after some stickiness in inflation suggested a Reserve Bank of Australia interest rate cut is unlikely this year.
Mixed US indicators overnight, showing a loosening US jobs market but a confident consumer, provided little clarity on the outlook for Federal Reserve easing, allowing the greenback to drift lower with Treasury yields on Tuesday following a strong seven-year note auction.
Recently though, economic readings have pointed to a resilient economy, particularly for employment, spurring a paring back of bets on the pace of rate reductions. The ADP employment report is due later in the day, ahead of the potentially crucial monthly payrolls report on Friday.
“The US dollar continues to garner strong support as markets adjust their rate path expectations,” said James Kniveton, senior corporate FX dealer at Convera.
“The American economy is currently firing on all cylinders.”
Meanwhile in Australia, “the increased inflation number in services is likely to mean rate reductions this year are a very distant prospect,” Kniveton said.
The Reserve Bank of Australia’s preferred inflation gauge, the trimmed mean measure, slowed to 3.5 percent from 4.0 percent in the third quarter, but service-sector inflation remained elevated. On a quarterly basis, the gauge increased by 0.8 percent, topping forecasts for a 0.7 percent rise.
The Aussie dropped as low as $0.6537 for the first time since Aug. 8, before trading 0.27 percent weaker at $0.6542 at 0531 GMT.
