The state of the U.S. dollar was far from being ideal on Wednesday, while the Australian dollar pared gains following a jump on surprisingly strong inflation data. The yen edged up ahead of the country’s central bank’s meeting on Thursday.
Investors are looking to policy announcements this week from the Canadian and European central banks for hints on the outlook for rates against a backdrop of supply-side driven global inflation pressures.
The U.S. dollar index, which tracks the greenback against a basket of currencies stood at 93.896.
Analysts from Standard Chartered expect the currency market risk sentiment to be limited until the next week.
Australian dollar on Wednesday
The Aussie was flat on the day at $0.7504. One day earlier, the Australian dollar rose to $0.7536 after data showed that Australian core inflation sped to a six-year high in September, surprising the market. The data mentioned above prompted a spike in short-term yields.
The country’s central bank meets on Tuesday next week. The market pricing is at odds with the Reserve Bank of Australia’s policymakers’ position.
The greenback fell against the Japanese yen, with the pair changing hands at 113.76, still within recent images. The Bank of Japan (BOJ) meets on Thursday. It is expected to downgrade its economic assessment, with markets betting on no rate hike in the foreseeable future.
The Canadian dollar fell around 0.2% to 1.24165 ahead of the central bank’s policy announcement later in the session. Analysts expect the Bank of Canada to increase its inflation forecast and largely to end stimulus from its bond-buying program.
The euro gained 0.1% to $1.1606. Investors expect the European Central Bank (ECB) which meets on Thursday to take a dovish tone.
The government of the euro zone’s largest economy cut its 2021 growth forecast for this year. Germany is struggling to cope with energy prices. A global shortage of semiconductors is another serious issue.
The British pound dropped 0.4% against the euro at 84.555 pence per euro as the finance minister unveiled Britain’s budget forecasts.
Elsewhere, the largest cryptocurrency Bitcoin fell to as low as $58,100.01, its worst result in a week and a half. Last week, Bitcoin jumped reached its highest point. Bitcoin’s price decline in the following days. Nonetheless, Bitcoin is on track for its best month since February.