Investing.com – The US dollar edged higher on Tuesday, trading within tight ranges ahead of Wednesday’s highly anticipated consumer inflation report for November, while the euro fell marginally ahead of the European Central Bank’s latest policy meeting.
At 05:15 ET (10:15 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was trading 0.2% higher at 105.995.
CPI threatens to become big
Movements in the currency market were limited this week, with all eyes on the release of US November data on Wednesday as it is likely to provide further insight into the Federal Reserve’s interest rate trajectory.
The report is expected to show that the overall annual figure rose to 2.7% in November, above the previous month’s 2.6%, while the ‘core’ figure, which excludes volatile food and energy components, fell to expected to be 3.3%. unchanged compared to October.
The Fed has cut rates by 75 basis points since September and markets are currently expecting another 25 basis point cut at its December 17-18 meeting.
However, any indication that progress in bringing inflation back to the Fed’s 2% target has stalled would likely cause markets to revise their expectations.
“We doubt investors will want to see the DXY too much lower ahead of tomorrow’s US CPI figure and expect support at 105.40/60 to hold at close,” ING analysts said in a note.
The euro slips before the ECB meeting
In Europe, yields fell 0.2% to 1.0530 after holding steady at 2.4% in November, confirming preliminary data ahead of Thursday’s policy-setting meeting by the European Central Bank, the last policy meeting of the year.
The country is widely expected to agree to a new rate cut of 25 basis points, the fourth cut this year.
Such a cut appears to be a foregone conclusion for the market, ING said, but “the press conference could open the discussion for further cuts later, implying an easing of the outcome for the EUR.”
traded largely unchanged at 1.2748, with the pound holding up fairly well after data showed job vacancies in Britain dried up faster than other comparable countries over the past year.
Data from recruitment platform Indeed showed that there were 23% fewer jobs advertised on the platform in Britain as of November 29 compared to a year earlier, adding to signs of a loss of momentum in the UK economy in the second half of this year .
Rates were cut in November for a second time in 2024, and monetary policy easing will be slower than key rivals in 2025.
Australian dollar near four-month low
In Asia, yields fell 0.6% to 0.6399, hovering around a four-month low after holding rates at 4.35% at the December policy meeting, citing persistent underlying inflation and a tight labor market.
rose slightly to 7.2612 after disappointing trade data from China. Although the country’s figures rose in November, both exports and imports were weaker than expected.
China has committed to implementing more proactive fiscal stimulus and moderately looser monetary policy in 2025, and the focus is now on the Chinese Central Economic Work Conference, which will start on Wednesday.
rose 0.3% to 151.59, after previously rising to 151.71 for the first time since November 28.
