Dollar edges lower ahead of key U.S. inflation release
Investing.com — The U.S. dollar edged lower in early European trade Monday, with traders wary ahead of the release of key U.S. inflation data that could offer further clues on future Federal Reserve policies.
At 03:20 ET (07:20 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, edged 0.1% lower to 105.627.
The new week has started with the dollar on the backfoot as traders await the release, on Tuesday, of the U.S. consumer price data for October, for an update on the Fed’s progress in its battle to keep lowering inflation from last year’s multi-decade highs.
Inflation is expected to have risen 0.1% on a monthly basis. September's CPI rose 0.4% on a surprise surge in rental costs, but also showed a moderation in underlying inflation pressures.
A sharper cooling could fan the peak rate talk, fuelled by October's employment report, which pointed to easing conditions in the labor market.
However, Fed Chair Jerome Powell last week hinted that the battle against inflation may not be over yet, and a further interest rate hike was possible — a view that was largely backed up by a series of his colleagues throughout the week.
“If we look at the Fed Funds future curve, it is clear that markets remain highly doubtful another hike will be delivered at all, but Powell’s remarks probably represent the culmination of a pushback against the recent dovish repricing,” said analyst at ING, in a note.
More Fed speakers are lined up this week and are likely to echo Chair Powell in leaving the door open for further hikes, which could support the dollar, particularly if the inflation data suggests prices remain sticky.
EUR/USD rose 0.1% to 1.0692, bouncing after losses last week, with European
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