Dollar steadies as stocks slip
economictimes.indiatimes.comU.S. stocks had investors looking for safety and as an unexpected fall in British inflation hit the pound.
Sterling suffered its sharpest drop in two months overnight after British inflation dived below forecasts to an annual 3.9% in October, its lowest for two years.
Traders scrambled to price rate cuts by May and the currency dropped 0.7% to $1.2638.
[GBP/]
«The data suggests that inflation momentum in the United Kingdom is finally losing steam, allowing the Bank of England to join the global rate cutting cycle next year,» said analyst Marios Hadjikyriacos of brokerage XM.
Elsewhere heavy selling in the final hour of equities trade on Wall Street sent a ripple of risk-aversion through markets, lifting what had been an under-pressure greenback from lows.
The Australian and New Zealand dollars retreated from five-month highs. The Aussie was last at $0.6714, having touched its highest since July at $0.6779 a day earlier.
The kiwi traded at $0.6257. [AUD/]
The euro was stable at $1.0943.
The yen found support at 143.5 per dollar, after having lost ground on Tuesday when the Bank of Japan left its ultra-easy policy settings unchanged.
Currency markets' next focus is on Friday's release of the U.S. core personal consumption expenditure (PCE) index which is forecast by analysts to rise 0.2% in November with the annual inflation rate slowing to its lowest since 2021 at 3.3%.
Analysts suspect the balance of risk is on the downside and the slowdown in inflation means the Fed will have to ease policy just to stop real rates from rising.
But with 150 basis points of cuts already priced in next year, a massive rally in the bond market and the dollar index down more than 4% from an early November high, some signs of caution
