London (awp/afp) – The dollar stalled ahead of US inflation on Wednesday, while the yen benefited from remarks by the governor of the Bank of Japan (BoJ) discussing a possible rate hike at the next January meeting.
Around 10:10 a.m. GMT (11:10 a.m. in Paris), the greenback fell by barely 0.03% against the single currency, to 1.0311 dollars per euro, and lost 0.06% against the British currency, at 1.2224 dollars to the pound.
The consensus of economists surveyed by Bloomberg expects an increase in the consumer price index (CPI) for December in the United States published later in the session, to 2.9%, against 2.7% in november.
The Federal Reserve (Fed) must “at a minimum” see “substantial progress in terms of disinflation” before making further rate cuts, notes Patrick Munnelly of Tickmill.
“Without this, demand (in the United States, editor’s note) remains too strong to justify additional easing”, not to mention “the uncertainties linked to trade policy” once Donald Trump is invested in the White House, underlines the analyst.
On Monday, the American currency had also reached a peak since November 2022 against the euro and since November 2023 against the pound.
In the United Kingdom, inflation fell slightly in December, to 2.5% year-on-year, after two consecutive months of increases, where economists were banking on a stable figure.
-This slowdown could be interpreted by the Bank of England (BoE) as “a sign that restrictive monetary policy is helping to bring inflation closer to its objective” of 2%, thinks Joaquin Thul of EFG Asset Management.
Enough to slightly reinforce the expectations of the market consensus “which currently estimates the probability of a rate cut at the next meeting” at the beginning of February at more than 60%, notes the analyst.
The Japanese currency rose sharply, by 0.69% against the greenback, to 156.87 yen per dollar.
BOJ Governor Kazuo Ueda reinforced market expectations of a possible interest rate hike next week by raising the possibility on Wednesday, indicating his growing confidence about wage increases in the country, Bloomberg reports.
The deputy governor “Ryozo Himino had already made almost the same statements at the beginning of the week, but for the market, Ueda’s words seem to have even more weight”, “which leads to an appreciation of the yen”, summarizes Antje Praefcke, analyst at Commerzbank.
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