Dollar Edges Up Ahead of Inflation Data and Rate Bets Spark Aussie Surge

The US dollar edged up against its major peers on Wednesday as investors awaited the release of July's US inflation data, which could set the tone for central bankers meeting at Jackson Hole later this week.

The Australian dollar was the biggest mover, hitting $0.7865, 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 noted that underlying inflation is still showing no signs of slowing down, leaving a risk that the RBA will deliver another rate hike over the coming months.

The dollar also rose against the Japanese yen to 158.95 yen and against the Canadian dollar to C$1.3861, extending gains into a third consecutive day after Ottawa announced retaliatory tariffs on about $20 billion of US annual imports.