(Updates throughout) The dollar traded at its lowest in six...

(Updates throughout)

The dollar traded at its lowest in six months against the euro and pound on Wednesday after data showed U.S. inflation is cooling off, which investors believe gives the Federal Reserve room to slow the pace of future rate hikes.

After raising interest rates by 75 basis points at four successive meetings, the U.S. central bank is widely expected to deliver a 50 bp increase later in the day. Traders will then turn their focus to Thursday meetings of the Bank of England and the European Central Bank, where consensus is also for a 50 bp rate hike.

The euro EUR=EBS rose 0.2% against the dollar to $1.06495, not far off a six-month intraday high of $1.0673 touched in the previous session after U.S. inflation figures.

The pound GBP=D3 , which also hit a six-month high after the U.S. data, was up 0.1% at $1.2375 after a brief dip when UK inflation data too showed a sharper than expected fall.

But year-on-year inflation of 10.7%, compared to a predicted 10.9%, remains painfully high for British consumers.

U.S. consumer prices rose less than expected for a second straight month in November, with underlying consumer prices advancing by the least in 15 months, Tuesday's report from the Labor Department showed.

That data served to reinforce existing expectations that the Fed will slow the pace of its rate increases to 50 bps, and so the main focus of Wednesday's meeting will be the Fed's quarterly 'dot plot', which shows where policymakers expect rates to be at the end of each year, and remarks by chair Jerome Powell.

An increase in the median 'dot' for the level at the end of 2023 from the 4.625% projection at the end of September is widely expected, but a key question is how much it will rise by.

"Our suspicion at this juncture is that Chair Powell has his work cut out in turning this momentum and any hawkish rhetoric is unlikely to get much traction in the face of yesterday’s weak CPI print," Derek Halpenny, head of research, global markets at MUFG, said. "Any U.S. dollar strength on hawkish rhetoric could reverse quickly."

The dollar index =USD , which measures the greenback versus six major currencies, was down a touch at 103.91, having made a six-month low of 103.57 in the wake of the inflation data.

It has fallen 9% since hitting a 20-year high in September as expectations of high and rising U.S. interest rates, which fuelled dollar gains, have started to ease.

The dollar fell 0.5% to 134.92 yen JPY=EBS , and eased 0.2% against the offshore Chinese yuan CNH=D3 to 6.9541.

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	Currency bid prices at 1148 GMT 

 Description	  RIC		 Last		   U.S. Close  Pct Change	 YTD Pct	 High Bid	Low Bid 
											  Previous				   Change				  
											  Session											
 Euro/Dollar	   EUR=EBS																	   

							  $1.0652		 $1.0630	+0.21%		  -6.30%	  +1.0672	 +1.0619 
																								 
 Dollar/Yen		JPY=EBS																	   

							  134.9350		135.5050   -0.42%		  +17.32%	 +135.7250   +134.6800 
																								 
 Euro/Yen		 
				  S>		  143.74		  144.16	 -0.29%		  +10.30%	 +144.2600   +143.5600 
																								 
 Dollar/Swiss	  CHF=EBS																	   

							  0.9275		  0.9286	 -0.10%		  +1.70%	  +0.9296	 +0.9263 
																								 
 Sterling/Dollar   GBP=D3																		

							  1.2377		  1.2365	 +0.11%		  -8.47%	  +1.2403	 +1.2345 
																								 
 Dollar/Canadian   CAD=D3																		

							  1.3560		  1.3544	 +0.12%		  +7.25%	  +1.3574	 +1.3531 
																								 
 Aussie/Dollar	 AUD=D3																		

							  0.6863		  0.6858	 +0.08%		  -5.59%	  +0.6881	 +0.6822 
																								 
 NZ				NZD=D3																		

 Dollar/Dollar				0.6441		  0.6463	 -0.36%		  -5.92%	  +0.6464	 +0.6434 
																								 
																								 
 All spots  FX=  
Tokyo spots  AFX=  Europe spots  EFX=   Volatilities  FXVOL=   Tokyo Forex market info from BOJ  TKYFX  
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World FX rates	https://tmsnrt.rs/2RBWI5E 

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