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Dollar Moves Higher Ahead of Inflation Data

Dollar moves higher ahead of inflation data

Investing.com - The dollar moved higher against a basket of the other major currencies on Tuesday as investors looked ahead to U.S. inflation data later in the day which could offer insights into the pace of rate hikes by the Federal Reserve this year.

The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was up 0.19% to 90.06 by 04:33 AM ET (08:33 AM GMT).

The Labor Department is due to release U.S. CPI data at 08:30 ET which was expected to confirm that inflation remains tepid even as the labor market continues to tighten.

A higher reading could fuel expectations that the Fed could raise interest rates four times, rather than three times, this year. A rate hike at its upcoming policy meeting next week is almost fully priced in by markets.

Data last week pointing to a slowdown in wage growth last month despite strong jobs growth had tempered expectations that the U.S. central bank might project four hikes for this year, rather than three.

The euro slipped lower, with EUR/USD dipping 0.11% to 1.2325.

The dollar gained ground against the yen, with USD/JPY climbing 0.5% to 106.94, up from an overnight low of 106.25.

The yen had initially risen overnight amid a growing cronyism scandal linked to the Japanese prime minister and his wife involving the sale of public land. The safe haven yen tends to rise in times of market uncertainty.

Sterling edged lower against the dollar, with GBP/USD dipping 0.08% to 1.3894.

The Australian dollar was a touch lower, with AUD/USD slipping to 0.7866 while the New Zealand dollar moved higher, with NZD/USD rising 0.38% to 0.7323.

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