FOREX-Dollar sags as weaker-than-expected U.S. inflation continues to weigh

Reuters

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    * Dollar hits four-week low vs yen
    * Weak Chinese data weighs on yuan, Aussie dollar
    * Aussie dollar falls to two-week low

 (Adds new comment, FX table, updates prices)
    By Gertrude Chavez-Dreyfuss and Ritvik Carvalho
    NEW YORK/LONDON, Sept 15  (Reuters) - The dollar weakened
against major currencies on Wednesday after softer-than-expected
U.S. inflation data released on Tuesday eased short-term
expectations about tapering of asset purchases from the Federal
Reserve.
    The dollar index  =USD  last stood at 92.441, down about
0.3% on the day from Tuesday, when it dropped following the
inflation data but then recovered on haven demand as stocks slid
on Wall Street.
    But the greenback trimmed losses after import prices fell
unexpectedly in August and a higher-than-expected reading for
the NY Fed's business survey.  urn:newsml:reuters.com:*:nL1N2QH01A  urn:newsml:reuters.com:*:nN9N2NL01Q
    The index, a measure of the dollar's value against six major
currencies, has meandered between 92.3 and 92.9 over the past
week as several Fed officials suggested the U.S. central bank
could reduce its buying of debt securities by the end of the
year, even after a much-weaker-than-expected payrolls report at
the start of the month.
    While elevated inflation has kept pressure on policymakers,
data overnight showed the U.S. consumer price index, excluding
the volatile food and energy components, edged up just 0.1% last
month.  urn:newsml:reuters.com:*:nL1N2QG130
    "The U.S. dollar is struggling to find a stronger sense of
direction amidst all this because weak NFP (non-farm payrolls) 
and CPI (consumer price index) data appear to be denting Fed
expectations, while investors also have to factor in the soft
run in stocks — and the risk that softness might extend — which
would support the U.S. dollar on haven flows," wrote Shaun
Osborne, chief FX strategist, at Scotiabank in a research note. 
    The Federal Open Market Committee's (FOMC) two-day policy
meeting next week should provide some clarity on the outlook for
tapering and interest rates.
    Tapering typically lifts the dollar as it suggests the Fed
is one step closer to tighter monetary policy. It also means the
central bank will be buying fewer debt assets, in effect
reducing the number of dollars in circulation and increasing the
currency's value.
    Valentin Marinov, head of G10 FX research at Credit
Agricole, said the Fed could start preparing the ground for a
very cautious policy normalization next week, potentially as
soon as November.
    In early New York trading, the euro rose 0.2% to $1.1825
 EUR=EBS .
    The dollar slipped to a four-week low of 109.14 yen
 JPY=EBS , and last changed hands at 109.15, down 0.5%.
    Meanwhile, the Chinese yuan  CNY=CFXS  and the Australian
dollar  AUD=D3  were knocked lower after Chinese data showed
factory and retail sales growth cooled more sharply than
expected last month.  L1N2QH08P  urn:newsml:reuters.com:*:nL1N2QH082 urn:newsml:reuters.com:*:nL4N2QH0XZ
    Adding to the broader China worries in financial markets was
a media report that property developer China Evergrande Group
 3333.HK  will not be able to make interest payments on its debt
next week. urn:newsml:reuters.com:*:nFWN2QG0UF
    The yuan extended its decline for the day to as far as
6.4433 yuan per dollar. The dollar was last down 0.1% at 6.4302
yuan.
    The Aussie dollar sank as low as US$0.7301 for the first
time in more than two weeks following China's data, but
recovered to trade little changed on the day at US$0.7317.
    
    ========================================================
    Currency bid prices at 8:41AM (1241 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct       High Bid    Low Bid
                                              Previous                   Change                   
                                              Session                                             
 Dollar index      =USD       92.4470        92.6720     -0.23%         2.741%        +92.6830    +92.4190
 Euro/Dollar       EUR=EBS    $1.1824        $1.1806     +0.17%         -3.21%        +$1.1832    +$1.1799
 Dollar/Yen        JPY=EBS    109.2750       109.6850    -0.36%         +5.77%        +109.7400   +109.1100
 Euro/Yen          EURJPY=    129.20         129.48      -0.22%         +1.80%        +129.5300   +129.0600
 Dollar/Swiss      CHF=EBS    0.9174         0.9201      -0.29%         +3.70%        +0.9204     +0.9164
 Sterling/Dollar   GBP=D3     $1.3829        $1.3808     +0.17%         +1.24%        +$1.3842    +$1.3794
 Dollar/Canadian   CAD=D3     1.2671         1.2693      -0.17%         -0.49%        +1.2708     +1.2667
 Aussie/Dollar     AUD=D3     $0.7323        $0.7323     +0.01%         -4.80%        +$0.7336    +$0.7302
 Euro/Swiss        EURCHF=    1.0846         1.0860      -0.13%         +0.36%        +1.0865     +1.0841
 Euro/Sterling     EURGBP=    0.8547         0.8543      +0.05%         -4.34%        +0.8563     +0.8535
 NZ                NZD=D3     $0.7099        $0.7098     -0.06%         -1.23%        +$0.7109    +$0.7074
 Dollar/Dollar                                                                                    
 Dollar/Norway     NOK=D3     8.5815         8.6295      -0.56%         -0.07%        +8.6560     +8.5675
 Euro/Norway       EURNOK=    10.1480        10.1990     -0.50%         -3.05%        +10.2235    +10.1240
 Dollar/Sweden     SEK=       8.5771         8.6038      -0.20%         +4.64%        +8.6165     +8.5692
 Euro/Sweden       EURSEK=    10.1429        10.1631     -0.20%         +0.66%        +10.1734    +10.1329
 
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World FX rates    https://tmsnrt.rs/2RBWI5E
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 (Reporting by Gertrude Chavez-Dreyfuss in New York and Ritvik
Carvalho in London; Editing by Toby Chopra, Chizu Nomiyama and
Timothy Heritage)
 ((gertrude.chavez@thomsonreuters.com; 646-301-4124; Reuters
Messaging: rm://gertrude.chavez.reuters.com@reuters.net))

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