Dollar Edges Higher as Markets Await Crucial Inflation Data

The US dollar edged higher on Wednesday, but remained range-bound against major peers as investors awaited the release of July's personal consumption expenditures (PCE) data.

This data is a crucial indicator for the Federal Reserve, which uses it to gauge inflation. Economists polled by Reuters expect core PCE to have risen 3.3% in July from a year earlier, unchanged from June and well above the Fed's 2% target.

The Australian dollar was the biggest mover, hitting $0.71865, its highest level in three months, after data showed the trimmed mean CPI gauge rose at a faster-than-expected annual rate of 3.6%. Capital Economics analysts wrote that 'with underlying inflation showing no signs of slowing, there's still a risk that the RBA will deliver another rate hike over the coming months.'

The dollar rose 0.1% against the Japanese yen to 158.95 yen and was also up 0.22% against sterling at $1.3633.