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© Reuters
By Peter Nurse
Investing.com – The dollar lost ground at the start of trading in Europe on Wednesday, reversing some of its overnight gains ahead of the release of key U.S. inflation data.
At 09:00 AM ET, the , which tracks the currency against a basket of six other majors, is down 0.1% at 110.340, after rising almost 0.8% during trading. night.
Attention will turn today to the release of the latest US inflation report for October, as traders look for clues as to the magnitude of the interest rate hike he plans to authorize in December: one more than 0, 75 percentage points or less than half a point.
The US CPI for October will be known at 2:30 p.m. (CET) and everything indicates that it will indicate an increase of 8%, its lowest level since February, while in terms it is expected to rise by 0.6%, compared to 0.4% the previous month.
In terms of core inflation, excluding energy and food prices, the CPI is expected to rise 6.5%, up from 6.6% in the previous reading, and 0.5% in terms, compared to 0.6% the previous month.
“A result that meets expectations of a 0.5% month-on-month rise in core inflation would likely keep hopes alive that Federal Reserve funds reach 5% next year and maintain support for the dollar,” they say. ING (AS:) analysts in a note.
The dollar had gotten a boost as traders turn to this safe haven after news that cryptocurrency exchange Binance had withdrawn a bailout offer for smaller rival FTX, prompting more digital currency sales.
Furthermore, although the outcome of the US mid-term elections remains unclear, it seems likely that the Republicans will take control of at least the House of Representatives, which would likely lead to a political deadlock in Washington.
“The scenario of a Republican House of Representatives and a Democratic Senate could be slightly positive for the dollar, in the sense that a stalled Biden Administration could focus on presidential executive orders, including a tougher policy regarding China,” they add. ING analysts.
The pair declines to the 1.0006 level, managing to avoid a rally below parity, the is up 0.2% to 1.1383, after a sharp drop of 1.6%, while the , very sensitive to risk, 0.4% left to 0.6401.
The pair retreats 0.1% to the 146.34 level, and the yen rebounds slightly, after recently falling to its lowest level since 1992. The Japanese currency is likely to struggle to make further gains as The country’s authorities seem willing to maintain the accommodative nature of monetary policy, while the Federal Reserve is expected to raise interest rates again in December.
The pair rose 0.1% to the 7.2514 level, with the yuan under pressure as hopes fade that the country will relax its strict anti-Covid measures in the short term as the number of cases continues to rise. in various cities.
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