Dollar dips as soft U.S. inflation weighs; Fed in focus next week
The dollar slipped against major currencies on Wednesday after softer-than-expected U.S. inflation data released on Tuesday eased short-term expectations about tapering of asset purchases from the Federal Reserve.
The dollar index last stood at 92.546, down about 0.1% on the day from Tuesday, when it dropped following the inflation data but recovered on haven demand as stocks slid on Wall Street.
But the greenback trimmed losses after data showing import prices fell unexpectedly in August and a higher-than-expected reading for the New York Fed’s business survey.
These reports offset data showing U.S. manufacturing output slowed in August, rising 0.2% from a 1.6% increase the previous month.
The dollar index, a measure of the greenback’s value against six major currencies, has traded between 92.3 and 92.9 over the past week as several Fed officials suggested the U.S. central bank could reduce buying debt securities by the end of the year, even after a weaker-than-expected payrolls report earlier this 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’s (FOMC) two-day policy meeting next week should provide some clarity on the outlook for tapering and interest rates.
Tapering typically lifts the dollar as it suggests the Fed is one step closer to tighter monetary policy. It also means the central bank will be buying fewer debt assets, in effect reducing the number of dollars in circulation and increasing the currency’s value.
In early afternoon trading, the euro was little changed against the dollar at $1.1808.
The dollar fell to a four-week low of 109.14 yen, and last changed hands at 109.43, down 0.2%.
Reference: CNBC
Thai
Eng