The Los Angeles Post
U.S. World Business Lifestyle
Today: March 20, 2025
Today: March 20, 2025

Dollar sits at near two-week low; US inflation test looms

FILE PHOTO: The employee of a currency exchange shop counts U.S. dollar banknotes in Ciudad Juarez
April 26, 2024

By Ankur Banerjee and Alun John

SINGAPORE/LONDON (Reuters) - The dollar meandered near a two-week low on Thursday ahead of U.S. inflation data that will help shape the Federal Reserve's next policy steps, a day after the release of minutes from the Fed's last meeting showed policymakers taking a cautious stance.

The dollar index, which measures the U.S. currency against six rivals, was at 105.69, broadly flat on the day, but not far from 105.53, its lowest since Sept. 25 touched earlier in the day.

The euro and yen were both steady against the dollar, at $1.0621 for the European common currency and 149.13 per dollar for the yen, with major moves capped by the looming inflation figures.

September's U.S. consumer price index data, which is expected to show inflation moderated last month, is due at 1230 GMT.

A downside surprise to inflation will likely support the case for the Fed having finished its tightening cycle, which would pull down U.S. Treasury yields and the dollar, according to Carol Kong, a currency strategist at Commonwealth Bank of Australia.

"On the flip side, an upside surprise will likely encourage markets to reprice higher the chance the (rate setting) Federal Open Market Committee will follow through on its projected 25 basis point hike."

Futures markets are pricing in a 26% chance of a 25 basis point (bps) increase by the Fed's December meeting though just a 9% chance of a 25 bps rise at the central bank's next meeting in November, according to the CME FedWatch tool.

The dollar's recent weakness has been driven by declining Treasury yields as bond prices rallied on the Fed's softer stance on future rate rises. Bond yields move opposite to their price. The yield on 10-year Treasury notes was down a touch at 4.575%. It hit its highest since 2007 last week at 4.887 but is down more than 20 bps this week.

Also in the mix for currency investors on Thursday was sluggish British growth figures, which showed the economy partially recovered in August after a sharp drop in July.

The pound initially did not significantly react but was last down 0.16% at $1.2294.

The pound was the best performing G10 currency in the first half of this year, thanks to better-than-expected economic data and sticky inflation that drove expectations the Bank of England (BoE) would be increasing rates for longer than most peers.

It then had its worst month in a year in September, as those factors reversed, before steadying this month.

"Without a growth pickup, inflation is likely to continue cooling back towards the BoEโ€™s target, and a final rate hike this year looks risky given current economic weakness," said Nick Rees, FX market analyst at Monex Europe.

"FX markets appear of a similar view."

Thursday's CPI release comes after Wednesday's mixed report on U.S. producer prices, and minutes from the Fed's September meeting.

Fed officials pointed to uncertainties around the economy, oil prices and financial markets as supporting "the case for proceeding carefully in determining the extent of additional policy firming that may be appropriate", the minutes showed.

The Swiss franc was set to strengthen for the seventh successive session, the longest streak since July 2020.

The dollar was last down 0.25% at 0.8997.

(Reporting by Ankur Banerjee in Singapore; Editing by Sam Holmes, Jamie Freed and Emelia Sithole-Matarise)

Share This

Popular

Business|Europe|Political|US|World

Trump says US will sign Ukraine minerals deal soon, peace efforts going 'pretty well'

Trump says US will sign Ukraine minerals deal soon, peace efforts going 'pretty well'
Business|Crime|US

One year after Baltimore bridge collapse, NTSB finds 68 US bridges need to be assessed for risk of collapse if hit by ship

One year after Baltimore bridge collapse, NTSB finds 68 US bridges need to be assessed for risk of collapse if hit by ship
Business|Political|Technology|US

โ€˜Iโ€™m embarrassed to drive itโ€™: Tesla owner on why heโ€™s getting rid of his car

โ€˜Iโ€™m embarrassed to drive itโ€™: Tesla owner on why heโ€™s getting rid of his car
Business|Finance|Sports|US

Who is William Chisholm, leader of group that agreed to buy the Celtics for $6.1B?

Who is William Chisholm, leader of group that agreed to buy the Celtics for $6.1B?

Economy

Asia|Business|Economy|Stock Markets|US

Stock market today: Wall Street edges lower despite solid data on the economy

Stock market today: Wall Street edges lower despite solid data on the economy
Economy|Political|US

Trump extends deadline for New York to end congestion toll for Manhattan drivers

Trump extends deadline for New York to end congestion toll for Manhattan drivers
Business|Economy|Finance|Political|US

Bank of Canada could change tack, give range of projections

Bank of Canada could change tack, give range of projections
Americas|Asia|Business|Economy|Technology

GM, Hyundai in talks to share pickups and electric vans in North America, sources say

GM, Hyundai in talks to share pickups and electric vans in North America, sources say