The U.S. dollar hovered near a 2-1/2-month low versus major peers 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 U.S. inflation.
Analysts forecast figures due at 1230 GMT to show a 3.6% lift in year-on-year prices, boosted by last April’s low base.
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 more than two months against the euro overnight, following a strong European growth survey, and it traded just shy of that level at $1.2126 in Asia.
The yen fell 0.2% to 108.835 per dollar.
Risk aversion helped a gauge of the safe-haven dollar a fraction higher to 90.278 as selling pressure persisted in stock markets, but that still left the dollar index just above key support around 89.677 and 89.206.
Sterling clung to recent gains to trade at $1.4118.
Nominal U.S. yields crept higher with the focus on inflation, but real yields remain negative and under pressure.
The U.S. currency is also being weighed down by the improving global growth outlook, which tends to draw investors’ cash to emerging markets, and by big and growing U.S. trade and current account deficits which also send dollars abroad.
The dollar index is “finding some risk aversion-related stability just above 90” amid the sell-off in equities, “but it’s unlikely to morph into any meaningful upside,” Westpac strategists wrote in a report.
“Fedspeak continues to underscore the patient pledge,” while the “eurozone’s rebound metrics continue to close the gap with the U.S.,” keeping the dollar index heavy through the next several months, they said.
In the digital space, cryptocurrency ether rose about 4% to a record $4,358.38, bringing its gain this month to 56%.
That’s as bigger rival bitcoin remains stuck below $60,000, nearly a month after setting an all-time peak at $64,895.22. It last traded around $57,471.20.
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