NEW YORK: The dollar fell on Monday in thin trading as investors priced in a lower US consumer price inflation number for November and a Federal Reserve likely to slow the pace of its rate increases at the conclusion of its two-day policy meeting on Wednesday.
Consumer inflation data for November lands on Tuesday and is expected to show a 6.1% rise in the core reading on a year-on-year basis, which excludes food and energy prices, down from 6.3% in October.
In late morning trading, the euro rose 0.1% against the dollar to $1.0546. The single European currency has gained almost 8% so far in the fourth quarter, as investors have previously banked on the European Central Bank sticking to a course of aggressive rate hikes.
The dollar was little changed against the Swiss franc at 0.9348 francs. Against the yen, however, the dollar rose 0.5% to 137.24.
The dollar index, which measures the greenback’s value against six major currencies, was down 0.1% at 104.92.
“The weaker dollar is signalling that the market is seeing lower inflation and it is hearing what (Fed Chair Jerome) Powell is saying the Fed is cutting back on the pace of its rate increases and the market is pricing all that in,” said Joe Perry, senior market analyst at FOREX.com and City Index in New York.
He added that the dollar index peaked on Sept. 28 and has come off to around 104.70, which is the 50% retracement from the lows to the highs of the year, and is also the 200-day moving average.
“So it’s interesting that what took us the first three quarters to get to the high, we gave it up in two months,” Perry said.
This week is one of the most macro-packed so far this year, with four major central banks holding their final policy meetings of 2022.
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