US dollar awaits inflation data, oil lifts petrocurrencies

London

THE US dollar was little changed against the euro and yen on Tuesday ahead of US inflation data, while the main petrocurrencies got a lift as oil prices began climbing again and China reported reassuring export numbers.

The possibility of US stimulus withdrawal - brought to the fore by a surprise shift in tone last month from the Federal Reserve - has boosted the dollar in recent weeks despite a renewed rise in coronavirus cases in many parts of the world.

With US consumer price inflation later likely to feed the debate, the greenback was fractionally firmer against the euro at US$1.1856 after a more than 2 per cent rise versus the common currency over the last month.

Economists polled by Reuters expect the June CPI data due at 1230 GMT to show a 0.5 per cent rise from May and 4.9 per cent from a year earlier. Dealers reckon a miss on either side could move the dollar and the bond market by shifting expectations on interest rates.

Analysts at JPMorgan said central banks around the world are becoming increasingly hawkish at the moment with a few notable exceptions - the European Central Bank (ECB), the Bank of Japan and People's Bank of China, which made an dovish adjustment on July 9.

Top ECB policymakers, including both its president and vice-president, flagged on July 12 that the bank would stay supportive and is readying new "forward guidance" for its policy meeting next week to take into account a newly tweaked 2 per cent inflation target.

In early afternoon London trading, the Japanese yen stood at 110.26 per dollar having moved little more than ten pips all morning. The Swiss franc was a touch lower at 0.9166 per dollar but still close to a one-month high.

Rising oil lifted Norway's crown, Canada's dollar and the Russian rouble between 0.3 per cent and 0.7 per cent, while escalating violence over the jailing of former president Jacob Zuma sent South Africa's rand tumbling 1 per cent.

Sterling sagged 0.3 per cent to US$1.3847 as Covid cases surged ahead of England's plans to remove all remaining restrictions.

China's yuan rose to a near one-week high after surprisingly strong trade data eased fears about a slowdown in what has been one of the world's strongest economic recoveries.

The New Zealand dollar was down 0.1 per cent at US$0.6973, just below its 20-day moving average. REUTERS