US dollar ticks up ahead of US inflation data

London

THE US dollar nudged up against major peers on Wednesday (Nov 10) after weakening in the past 3 days, with investors taking little risk ahead of US inflation data which could shine some light on how fast the Federal Reserve might raise interest rates.

The US consumer price index, due later on Wednesday, is predicted by a Reuters poll of economists to come in at an annualised 4.3 per cent versus the US Federal Reserve average annual 2 per cent inflation target.

The Fed last week restated its belief that current high inflation is transitory but many investors fear that underestimating the rise in prices could prove a costly policy mistake.

"A lot is resting on this inflation being transitory. This will be the multi-trillion dollar question for 2022, that's for sure", Deutsche Bank strategist Jim Reid said in his morning note to clients.

Data showed on Tuesday that US producer prices increased solidly in October, driven by surging costs for petrol and motor vehicle retailing, suggesting that high inflation could persist.

At 4.50pm, Singapore time, the US dollar index, which measures the greenback against 6 rivals, rose 0.19 per cent to 94.146, after falling from a more than one-year peak of 94.634 reached on Friday.

Against Japan's yen the greenback came off lows last seen since Oct 11 and rose 0.18 per cent to 113.080 yen. The euro fell 0.23 per cent to US$1.1569.

Hammered last week after the Bank of England's surprise decision to keep rates unchanged, sterling retreated 0.18 per cent to US$1.3535 but stood well up Friday's more than one-month low of US$1.3425.

Fears of potential contagion from China's property market woes also fuelled the search for safer assets.

China's Evergrande faces a deadline on Wednesday to pay an offshore bond, and Kaisa Group pleaded on Tuesday for help to pay loans, workers and suppliers.

The Aussie briefly slid to US$0.73525 but gradually limited its losses to a 0.07 per cent fall.

New Zealand's kiwi dropped 0.18 per cent to US$0.71170.

In cryptocurrencies, Bitcoin hovered below the all-time high of US$68,564.40 marked on Tuesday, last changing hands around US$66,670.

Ether traded at US$4,715.30, also staying within sight of Tuesday's record peak of US$4,842.65. REUTERS