Ahead of a highly anticipated U.S. consumer inflation report later in the day, traders became cautious and reluctant to take on new positions, which caused the dollar’s soaring gain to stall on Wednesday.
Following an overnight decline and a retreat from a two-year high against a basket of currencies at the beginning of the week, the greenback was stabilizing in the early Asian session.
A muted reading on U.S. producer prices contributed to the slide by dragging Treasury rates down from their peak.
The euro last traded at $1.0301 against the dollar, some distance from a two-year low.
As domestic borrowing costs continue to rise and concerns about Britain’s fiscal stability persist, sterling dropped 0.09% to $1.2205.
Investors will be eagerly monitoring the UK’s inflation data, which is also coming later on Wednesday, as pressure mounts on Finance Minister Rachel Reeves due to worries about domestic price pressures and a faltering economy.
Any positive surprise might further restrict the potential for rate cuts by the Federal Reserve this year, as markets in the US are projecting a 0.2% monthly increase in core consumer prices for December.
Following last week’s impressive jobs data, which highlighted the strength of the U.S. economy and caused traders to significantly reduce their expectations on additional Fed easing, Wednesday’s news follows suit.
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