News: FOREX-Sterling squeezed as focus turns to U.S. inflation

(Updates prices)

Sterling crosses nursed losses on Thursday, while the yen found a footing in holiday-thinned trade ahead of the last major data release of the year in Friday's U.S. inflation figures.

Sterling GBP=D3 suffered its sharpest drop on the dollar in two months on Wednesday after British inflation dived below forecasts to an annual 3.9% in October, a two-year low.

The currency fell 0.7% to $1.2638 as traders priced in Bank of England rate cuts as soon as May. Subsequent moves in Thursday's Asia session were modest and it last bought $1.2639.

Against the euro EURGBP= the pound hit its weakest in more than three weeks at 86.68 pence and it last traded near that level at 86.59. The Aussie AUDGBP=R hovered at £0.5334, after hitting a six-month top of £0.5355.

Analysts forecast a similar easing for Friday's U.S. core personal consumption expenditure (PCE) data, with the annual inflation rate seen slowing to its lowest since 2021 at 3.3%.

But given the dollar has been on the back foot for weeks and 150 basis points of Federal Reserve cuts are already priced in for 2024, caution held off any further dollar selling, for now.

"Some adjustments in positions and paring back of risks ahead of (this) event...is only sensible," said OCBC currency strategist Christopher Wong in Singapore.

"Liquidity is getting thinner as we get closer to the festive season, thin liquidity can exacerbate price movements on any data surprises."

Heavy selling in the final hour of equities trade on Wall Street had also sent a ripple of risk-aversion through markets that hung over Asia trade, even as stock futures steadied.

The mood helped the safe-haven yen JPY=EBS along with Japan lifting its growth projection for the fiscal year to 1.6%.

The yen rose about 0.5% and last traded at 142.86 per dollar. It has lost more than 8% on the dollar this year as the Bank of Japan has steadfastly kept short-term rates negative, against 300 basis points of U.S. interest rate hikes.

The euro EUR=EBS was stable at $1.0952. The Australian and New Zealand dollars traded just below Wednesday's five-month highs. The Aussie AUD=D3 was last at $0.6753, having touched its highest since July at $0.6779 a day earlier. The kiwi NZD=D3 traded at $0.6251.

The dollar index =USD , down 1% for the year so far, was marginally softer at 102.29 in Asia. Ten-year Treasury yields US10YT=RR had hit a seven-month low of 3.847% overnight.

China's yuan CNY=CFXS > slipped as offshore yuan funding costs fell and China's blue-chip stock index hovered near 5-year lows. It was last at 7.1463 to the dollar.

Bitcoin BTC=BTSP leapt briefly above $44,000 on Wednesday and was steady at $43,598 on Thursday. In emerging markets Indonesia's rupiah IDR=ID was steady at 15,525 to the dollar ahead of a central bank policy decision.

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	Currency bid prices at 0541 GMT 

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

							  $1.0951		 $1.0943	+0.07%		  +0.00%	  +1.0954	 +1.0937 
																								 
 Dollar/Yen		JPY=EBS																	   

							  142.9500		143.6750   -0.51%		  +0.00%	  +143.5550   +142.8700 
																								 
 Euro/Yen		 
				  S>		  156.54		  157.07	 -0.34%		  +0.00%	  +157.1200   +156.3700 
																								 
 Dollar/Swiss	  CHF=EBS																	   

							  0.8617		  0.8626	 -0.06%		  +0.00%	  +0.8627	 +0.8616 
																								 
 Sterling/Dollar   GBP=D3																		

							  1.2646		  1.2639	 +0.00%		  +0.00%	  +1.2650	 +1.2631 
																								 
 Dollar/Canadian   CAD=D3																		

							  1.3352		  1.3371	 -0.13%		  +0.00%	  +1.3370	 +1.3351 
																								 
 Aussie/Dollar	 AUD=D3																		

							  0.6751		  0.6731	 +0.33%		  +0.00%	  +0.6753	 +0.6720 
																								 
 NZ				NZD=D3																		

 Dollar/Dollar				0.6250		  0.6248	 +0.05%		  +0.00%	  +0.6262	 +0.6242 
																								 
																								 
	 
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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