Dollar trades in tight range ahead of key U.S. inflation release
Investing.com — The U.S. dollar edged lower Wednesday, trading in a tight range with traders on edge before key U.S. inflation data that could influence the future path of interest rates.
At 04:35 ET (09:35 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% lower at 102.147, after gaining 0.2% on Tuesday.
The dollar has rebounded from December’s 2% fall as the traders have chosen the new year to reassess the likely speed and magnitude of the interest rate cuts most expect the Federal Reserve to deliver in 2024.
The Fed's surprising dovish tilt in December has resulted in the market projecting around 150 basis points of cuts this year, but this is reliant on inflation continuing to retreat.
This brings Thursday’s December U.S. CPI release firmly into focus, as it is likely to drive market sentiment until the next Fed meeting at the end of this month.
The headline figure is expected to rise 0.2% on the month, an annual rise of 3.2%, just up from 3.1% the prior month. However, the core figure, which excludes volatile food and energy prices, is expected to fall to 3.8% on an annual basis, the lowest since mid-2021.
A speech by New York Fed President John Williams will also be studied carefully later in the session, as the influential policy maker has been on the hawkish side of the rate cut debate.
In Europe, EUR/USD traded 0.2% higher at 1.0947, with the single currency helped by data showing that French industrial production rose 0.5% on the month in November, an improvement from the fall of 0.3% in the prior month.
That said, this presented a rare piece of good news from the region, with European Central Bank Vice President Luis de Guindos saying earlier Wednesday
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