US CPI data (1330 GMT) to set tone, may impact Fed ratecut bets
Bitcoin near two-year high after ETF approval
Weak wages weigh down yen
(Updates prices)
The dollar drifted lower in Asia on Thursday as traders waited on U.S. inflation data to see whether bets on as many as five Fed interest rate cuts this year were justified, while weak wages data dragged the yen to a six-week low on the euro.
Bitcoin BTC= traded at $46,400, just short of a two-year high, with investors welcoming the much-anticipated U.S.
approval
of spot bitcoin exchange-traded funds.
The approval
opens the way
for institutional buying and had been
priced in
over recent months, driving the cryptocurrency up 70% since mid-October.
The Australian AUD=D3 and New Zealand NZD=D3 dollars were each about 0.3% higher at $0.6721 and $0.6294, respectively, with moves capped ahead of the U.S. data at 1330 GMT.
The euro EUR=EBS rose 0.1% to $1.0979 and sterling GBP=D3 rose 0.2% to $1.2767.
The dollar index =USD fell 0.1% to 102.23.
The dollar slid through the latter months of 2023 as the Federal Reserve indicated it was finished with rate hikes and traders priced in steep cuts.
While that pricing has moderated slightly, and the dollar recovered, futures
0#FF: still show the market expects 140 basis points (bps) of cuts this year with a two-thirds chance they will begin as soon as March, leaving prices sensitive to data surprises."In our view investors are still too optimistically positioned for Fed rate cuts," said Rabobank senior FX strategist Jane Foley in a note to clients.
"We expect further correction in this outlook and consequently expect the dollar to see some support on a 1-to-3-month view," she said, with the euro to fall as far as $1.05 on a three-month view as Germany's economy falters.
U.S. core inflation USCPFY=ECI is seen at 0.2% for the month and 3.8% year-on-year for December, its slowest since early 2021.
A 0.3% reading, Deutsche Bank's Alan Ruskin points out, would "suggest some stalling out in the downward improvements" and decrease the urgency of cutting interest rates.
After gaining sharply on Wednesday the dollar fell 0.3% to 145.39 yen JPY=EBS , though the Japanese currency struck a six-month trough of 159.99 per euro JPYEUR=R in early trade.
Data on Wednesday showed Japanese workers' real wages shrank for a 20th straight month in November - confounding officials' wishes to see wage gains before tightening policy.
The softer dollar helped China's yuan CNY=CFXS off a one-month trough to 7.1621 per dollar.
South Korea's central bank kept its policy rate unchanged for an eighth consecutive meeting, as expected, leaving the won KRW=KFTC marginally stronger at 1,315.8 per dollar.
======================================================== Currency bid prices at 0500 GMTDescription RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar EUR=EBS $1.0972 +0.05% -0.55% +1.0985 $1.0978 +1.0970 Dollar/Yen JPY=EBS 145.7250 -0.25% +0.00% +145.8000 145.3800 +145.3300 Euro/Yen EURJPY=EBS 159.93 -0.21% +0.00% +160.0000 159.60 +159.5200 Dollar/Swiss CHF=EBS 0.8509 -0.15% +0.00% +0.8507 0.8495 +0.8492 Sterling/Dollar GBP=D3 1.2742 +0.20% +0.33% +1.2770 1.2764 +1.2741 Dollar/Canadian CAD=D3 1.3380 -0.11% +0.00% +1.3380 1.3364 +1.3358 Aussie/Dollar AUD=D3 0.6700 +0.29% -1.44% +0.6725 0.6719 +0.6698 NZ Dollar/Dollar NZD=D3 0.6227 +0.39% -1.08% +0.6252 0.6248 +0.6225 All spots FX=Tokyo spots AFX= Europe spots EFX= Volatilities FXVOL= Tokyo Forex market info from BOJ TKYFX
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