Dollar wavering with inflation looming as next test for rates
The yen hit a one-month high and the dollar was held below recent peaks on Tuesday as traders awaited inflation figures due in the U.S. and China to guide the interest rate outlook, while momentum carried bitcoin to a fresh record high.
The data due on Wednesday is expected to show U.S. consumer prices galloped and Chinese factory gate prices soared in October. But it also comes as commodity prices have eased from peaks and central bankers have dampened speculation that they will raise interest rates imminently.
The firmer yen, which rose about 0.4% to 112.80 per dollar, and the fall in 20-year and 30-year U.S. Treasury yields to seven-week lows suggested investors are pricing in a pretty modest hiking cycle and slower economic growth in the longer term.
The euro, which had dropped to a 15-month trough of $1.15135 last week, firmed 0.2% to $1.1606.
The U.S. dollar index slipped 0.2% to 93.878, about the middle of the range it kept through October.
Fed funds futures have pushed back the likely date for rates lift-off from around July next year to September or October.
Analysts at Standard Chartered expect the Fed to raise rates slowly after making its first hike in the third quarter of next year.
Last week, the Bank of England surprised investors by holding rates, while the Reserve Bank of Australia and the Federal Reserve dampened market expectations that they would hike rates aggressively.
Sterling, hammered last week in the wake of the BoE surpise, extended its recovery and was last at $1.3580 after falling as low as $1.3425 on Friday.
· Thai baht hits 2-month peak as c.bank policy meeting looms
The baht led gains among emerging Asian currencies on Tuesday as the dollar fell on inflation concerns, while Thai stocks inched higher in low-volume trade a day before the country's central bank meeting.
The baht gained up to 0.7%, and was at its strongest in nearly two months as the greenback dipped, with traders awaiting key price data in the United States on Wednesday.
· Bitcoin, ether scale new peaks as flows pour in to crypto
Bitcoin and ether made record peaks in Asia trade on Tuesday, with enthusiasm for cryptocurrency adoption and worry about inflation driving momentum and flows into the asset class.
Bitcoin rose as high as $68,564 in Asian afternoon trade and ether , the second-biggest cryptocurrency by market value, earlier hit $4,825.
Both have more than doubled since June and added nearly 70% against the dollar since the start of October.
Reference: CNBC, Reuters
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