FOREX-Dollar drifts as soft inflation raises taper timing questions

Reuters

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    By Kevin Buckland
    TOKYO, Sept 15 (Reuters) - The dollar drifted within recent
ranges against major peers on Wednesday after
softer-than-expected U.S. inflation raised doubts about a taper
of Federal Reserve stimulus this year.
    The dollar index  =USD  stood at 92.632, little changed from
Tuesday, when it dropped following the inflation data only to
recover on haven demand as stocks slid on Wall Street.
    The index has meandered between 92.3 and 92.9 over the past
week as several Fed officials have 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.
    The Fed holds a two-day monetary policy meeting next week,
with investors keen to find out whether a tapering announcement
will be made.
    Tapering tends to benefit the dollar as it suggests the Fed
is one step closer toward tighter monetary policy. It also means
the central bank will be buying fewer debt assets, effectively
reducing the number of dollars in circulation.
    "The softer print eases concerns over an imminent
acceleration in prices and should nullify any lingering pressure
on the Fed to taper in September," Rodrigo Catril, a senior
currency strategist at National Australia Bank, wrote in a
client note.
    "But a taper this year still looks like a good bet with
November or December now looking more likely."
    Even so, NAB predicts that the focus of global growth is
shifting away from the United States, pushing the currency down
to $1.23 versus the euro  EUR=EBS  by year-end.
    One euro bought $1.1808 on Wednesday, mostly flat from the
previous session.
    European Central Bank Chief Economist Philip Lane speaks at
the IMFS webinar later in the global day.
    The dollar slipped slightly to 109.595 yen  JPY=EBS ,
keeping close to the centre of the trading range of the past two
months.
    The U.S. currency edged higher against its antipodean rivals
though, adding 0.1% to $0.7316 per Aussie  AUD=D3  and rising
about the same margin to $0.7088 to New Zealand's kiwi  NZD=D3 .
    Commonwealth Bank of Australia is more bullish on the
dollar's prospects, predicting that accelerating employment
costs in the United States will keep consumer prices elevated.
    "Above-target inflation will prove more persistent than the
FOMC expects," Carol Kong, a strategist at CBA, wrote in a
report.
    "The implication is the FOMC will likely need to raise the
Funds rate by more than what markets are currently expecting,
which could support the USD down the track."
    
========================================================
    Currency bid prices at 0116 GMT
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar       EUR=EBS    $1.1808        $1.1806     +0.02%         -3.36%      +1.1808     +1.1801
 Dollar/Yen        JPY=EBS    109.5950       109.6750    -0.06%         +6.12%      +109.7350   +109.5550
 Euro/Yen         <EURJPY=EB  129.40         129.48      -0.06%         +1.95%      +129.5300   +129.3400
                  S>                                                                            
 Dollar/Swiss      CHF=EBS    0.9199         0.9201      -0.02%         +3.98%      +0.9203     +0.9199
 Sterling/Dollar   GBP=D3     1.3806         1.3808      -0.02%         +1.05%      +1.3812     +1.3801
 Dollar/Canadian   CAD=D3     1.2690         1.2693      -0.01%         -0.34%      +1.2700     +1.2688
 Aussie/Dollar     AUD=D3     0.7316         0.7323      -0.10%         -4.90%      +0.7322     +0.7312
 NZ                NZD=D3     0.7088         0.7098      -0.10%         -1.26%      +0.7099     +0.7086
 Dollar/Dollar                                                                                  
                                                                                                
    
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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 (Reporting by Kevin Buckland; Editing by Sam Holmes)
 ((Kevin.Buckland@thomsonreuters.com;))

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