Dollar Firms Amid Inflation Data Anticipation
The US dollar firmed up slightly in Asian trade on Wednesday as markets awaited the release of US inflation data for clues to Federal Reserve interest rate direction. The greenback's strength was limited by renewed attacks on shipping in critical Middle Eastern waterways. The yen, meanwhile, weakened against the dollar, reaching its softest levels of the month despite joint intervention by US and Japanese authorities.
The main focus this week is the US inflation data release, which could influence Federal Reserve interest rates. Last week's softer-than-expected jobs report and a press conference by Fed Chair Kevin Warsh did little to dispel doubts about rate direction. ING analysts expect easing inflation as oil prices remain contained.
Federal Reserve Bank of Chicago President Austan Goolsbee said the central bank is more concerned about high inflation than labor market weakness, but it's unclear whether this stance aligns with minority policymakers who favored an interest-rate hike last month. Traders are split on the Fed's next move, with a 50% chance of leaving rates unchanged and the same probability of a quarter-point increase.