U.S. Dollar Trades in Tight Range Ahead of Key Inflation Data
U.S. Dollar Index Edges Lower Ahead of Inflation Release
The U.S. dollar traded in a tight range on Wednesday, with traders anxiously awaiting key U.S. inflation data that could impact future interest rates. At 04:35 ET (09:35 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was 0.1% lower at 102.147, following a 0.2% gain on Tuesday.
U.S. CPI Set to Drive Dollar Sentiment
The dollar has rebounded from a 2% fall in December as traders reassess the anticipated speed and magnitude of expected interest rate cuts by the Federal Reserve in 2024. The market currently projects around 150 basis points of cuts this year, contingent on inflation continuing to decline. Thursday’s release of December inflation data is expected to heavily influence market sentiment until the next Fed meeting at the end of the month.
Euro Assisted by French Industrial Production
The euro traded 0.2% higher at 1.0947, buoyed by data indicating a 0.5% increase in French industrial production in November, a positive shift from the previous month’s 0.3% decline. However, European Central Bank Vice President expressed concerns about the eurozone potentially being in a recession last quarter and the ongoing weak prospects for the region.
Yen Weakens Close to 145 Mark
The yen traded 0.3% higher to 144.94, nearing the 145 mark as traders became more convinced that the Bank of Japan will delay a pivot away from its ultra-dovish policies in the aftermath of the recent devastating earthquake in central Japan. Additionally, the Australian dollar rose 0.4% to 0.6710, with data showing inflation easing in November but remaining above the Reserve Bank’s annual target of 2% to 3%.
