Dollar drifts after soft inflation, Chinese data weighs on Asian currencies
The dollar held recent ranges against peers on Wednesday after softer-than-expected U.S. inflation figures tempered immediate expectations about Federal Reserve tapering while disappointing Chinese data weighed on the yuan and Aussie.
The dollar index stood at 92.632, little changed from Tuesday, when it dropped following the inflation data only to recover on haven demand as stocks slid on Wall Street.
The index has meandered between 92.3 and 92.9 over the past week as several Fed officials have suggested the U.S. central bank could reduce its buying of debt securities by the end of the year, even after a much-weaker-than-expected payrolls report at the start of the month.
While elevated inflation has kept pressure on policymakers, data overnight showed the U.S. consumer price index, excluding the volatile food and energy components, edged up just 0.1% last month.
The Federal Open Market Committee (FOMC) holds its monetary policy meeting next week, with investors keen to find out whether a tapering announcement will be made.
Tapering tends to benefit the dollar as it suggests the Fed is one step closer toward tighter monetary policy. It also means the central bank will be buying fewer debt assets, effectively reducing the number of dollars in circulation.
The dollar slipped slightly to 109.595 yen, keeping close to the centre of the trading range of the past two months.
The yuan extended its decline for the day to as far as 6.4433 yuan per dollar before trading about 0.1% weaker at 6.4410, threatening to snap a five-day string of gains.
Reference: Reuters
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