Dollar wobbles in thin trading; yen firms
By Rae Wee
SINGAPORE (Reuters) -The dollar was trying to find a floor on Tuesday in holiday-thinned trade, pressured by signs that inflation in the world's largest economy is cooling which will likely give the Federal Reserve room to ease interest rates next year.
The yen meanwhile steadied near its recent five-month peak on the view that the Bank of Japan (BOJ) could soon mark an end to its ultra-easy policy. For most of 2022 and 2023, the policy has kept the Japanese currency under pressure as other major central banks embarked on aggressive rate-hike cycles.
Currency moves were largely muted in the day after Christmas, as markets in the UK, Australia, New Zealand and Hong Kong, among others, were still out for a public holiday.
Against the greenback, the New Zealand dollar scaled a fresh five-month peak of $0.6325, while the Australian dollar was similarly huddled near its recent five-month top and last bought $0.6817.
The euro edged 0.03% higher to $1.1024, not too far from a five-month top of $1.1040 hit last week, while sterling was little changed at $1.2706.
Data released on Friday showed U.S. prices fell in November from the previous month for the first time in more than 3-1/2 years and the annual increase in inflation slipped further below 3%, boosting market expectations of an interest rate cut from the Fed next March.
The reading came a week after Fed policymakers opened the door to rate cuts in 2024 at the central bank's final policy meeting for the year, a move that drove the dollar lower.
«The Fed has made considerable progress on inflation, as core started the year closer to an annual rate of 5%, though the job is not yet done in ensuring inflation is on a sustained trajectory toward its 2% target,» Wells
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