By Tom Westbrook
SINGAPORE- The dollar slipped on Thursday to stand just off recent peaks as cooling US inflation data knocked down bond yields, while the yen hit a one-month high on rising bets on a rate hike in Japan.
The yen was the biggest major mover on the dollar overnight, rising about 1 percent and extending gains in Asia, as inflation relief in the US raised chances of Federal Reserve rate cuts and coincided with murmurs of a Bank of Japan hike next week.
The yen traded as firm as 155.21 per dollar, its strongest since Dec. 19. The greenback also handed back some recent gains against the Australian and New Zealand dollars and the Aussie hit a one-week high of $0.6248 in the Asia morning.
The euro ended up fairly steady and was last buying $1.0298. The dollar index was heading lower for a fourth straight session on Thursday, easing slightly to 109.02.
Foreign exchange markets made little direct reaction to the announcement of a ceasefire deal in Gaza, though the Israeli shekel did touch a one-month high.
Core US inflation was 0.2 percent month-on-month in December, in line with forecasts and below November’s 0.3 percent. Annualized, the 3.2 percent reading was cooler than the expectation for 3.3 percent. That followed a similarly softer-than-expected British inflation reading and remarks from a Bank of England policymaker saying the time was right to bring down interest rates. —Reuters
