US dollar climbs ahead of inflation data; cryptos crumble

THE US dollar rose ahead of US inflation data due later on Thursday (Nov 10) while cryptocurrencies remained under pressure after crypto exchange Binance scrapped plans to rescue ailing rival FTX.

The greenback was on track for a second consecutive day of strong gains, with investors also digesting the US mid-term election results.

At 1105 GMT the US dollar index, which tracks the currency against major peers, was up 0.56 per cent at 110.96.

Attention was largely on US inflation figures due later on Thursday, which are likely to affect the scale of the US Federal Reserve’s future interest rate hikes.

Economists expect the consumer price index inflation rate to have cooled in October, but analysts said the focus will be on the core reading that strips out volatile food and energy costs.

“It may not bring the clarity that people anticipate it will bring,” Jane Foley, head of FX strategy at Rabobank, said of the data.

“It could remain relatively well elevated and could certainly be far too elevated to signal that the Fed is going to change its position.”

The euro slid back below parity and last stood 0.71 per cent down at US$0.9938. Sterling gained 0.11 per cent to US$1.1373, marking a partial recovery from a 1.6 per cent slide in the previous session.

The US dollar has surged more than 16 per cent this year but has lost some steam over the past few weeks on hopes that the Fed could begin making smaller increases to interest rates as early as December.

The Japanese yen slipped 0.11 per cent to 146.54 to the US dollar. It hit a roughly two-week high of 145.18 in the previous session before ceding its gains.

A crisis in the crypto world also hurt investor sentiment, analysts said. The Binance exchange on Wednesday abandoned a bailout deal of rival FTX, leaving FTX chief executive Sam Bankman-Fried scrambling to explore all options, with his company on the brink of collapse.

“I do think there’s been a bit of contagion from what’s been going on in crypto,” said Ray Attrill, head of FX strategy at National Australia Bank.

Rabobank’s Foley said a sell-off in crypto assets is likely to have boosted the US dollar.

Bitcoin edged 2 per cent higher to US$16,264 after plunging in the previous session to less than US$16,000 for the first time since late 2020. It has tumbled more than 60 per cent this year.

FTX’s native token, FTT, was 97 per cent higher for the day at US$2.983, though its month-to-date loss stood around 90 per cent.

The latest results from Tuesday’s US mid-term elections showed Republicans were edging closer to securing a majority in the US House of Representatives. Yet control of the Senate hung in the balance after Democrats performed better than expected.

Elsewhere, the Aussie dollar dropped 0.58 per cent to US$0.6394 while the kiwi was down 0.48 per cent at US$0.5855. Both fell more than 1 per cent in Wednesday trading. REUTERS