CORRECTED-FOREX-Dollar loiters off highs as traders eye CPI

Reuters

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 (Corrects day of NY Fed survey to Monday from Tuesday)
    By Tom Westbrook
    SINGAPORE, Aug 9 (Reuters) - The dollar lurked just below
recent highs on Tuesday as traders waited for U.S. inflation
data due later in the week, which could take pressure off the
Federal Reserve and put it on the greenback if it suggests the
pace of price rises has peaked.
    The data is due on Wednesday and the anticipation is likely
to keep things calm until then.
    The Australian and New Zealand dollars rose overnight and
were steady in the pre-CPI calm in Asia. The Aussie  AUD=D3 
held gains at $0.6977. The kiwi  NZD=D3  did likewise at
$0.6276, leaving both just above their 50-day moving averages.
    Sterling  GBP=D3  held at $1.2081 and the euro  EUR=EBS  was
stuck just above parity at $1.0189, with the continent's energy
crisis meaning it may miss out on a boost if the dollar
weakened. The yen  JPY=EBS  rose slightly to 134.75 per dollar.
    On Monday, a New York Fed survey showed consumers' inflation
expectations fell sharply in July, perhaps easing some of the
upward pressure on rates from last week's strong jobs figures.
 urn:newsml:reuters.com:*:nW1N2ZA03W
    "Expectations that the Fed may announce another 75 basis
point rate hike on September 21 have risen on the back of
(Friday's) strong U.S. July payrolls report," said Jane Foley,
senior currency strategist at Rabobank.
    "Later this week, the July U.S. CPI inflation release is
expected to show some moderation in inflation pressures," she
said. "This may now be sufficient for the Fed to relax."
    Economists polled by Reuters see year-on-year headline
inflation  USCPNY=ECI  at 8.7% -- incredibly high, but below
last month's 9.1% figure.
    Money-market futures  0#FF:  show traders see about a
two-thirds chance of a 75 bp hike next month and have started
pushing expectations for rate cuts back, deeper into 2023.
 FEDWATCH 
    Two-year Treasury yields  US2YT=RR , which track short-term
U.S. rate expectations, held at 3.2157% on Tuesday, with
benchmark 10-year yields  US10YT=RR  45 bps below that at
2.7572%.
    An upside CPI surprise could drive yields and the dollar
higher.
    "Investors have become increasingly sure in their view that
inflation will drop back fairly quickly, and that it will
subsequently remain around the Fed's target," said Thomas
Mathews of Capital Economics.
    "The market is arguably quite vulnerable to a surprise on
inflation, should any evidence gather it is staying high longer
than expected. That would also probably prompt a sharper
response from the Fed, and see the bond market selloff resume in
earnest."
    
    ========================================================
    Currency bid prices at 0154 GMT
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar       EUR=EBS    $1.0192        $1.0194     -0.02%         +0.00%      +1.0201     +1.0189
 Dollar/Yen        JPY=EBS    134.6950       135.0450    -0.21%         +17.16%     +135.0250   +134.7550
 Euro/Yen         <EURJPY=EB  137.31         137.65      -0.25%         +0.00%      +137.7300   +137.2700
                  S>                                                                            
 Dollar/Swiss      CHF=EBS    0.9551         0.9555      -0.02%         +4.73%      +0.9556     +0.9551
 Sterling/Dollar   GBP=D3     1.2075         1.2080      -0.05%         -10.72%     +1.2088     +1.2074
 Dollar/Canadian   CAD=D3     1.2869         1.2858      +0.07%         +1.77%      +1.2874     +1.2852
 Aussie/Dollar     AUD=D3     0.6978         0.6984      -0.06%         -3.99%      +0.6992     +0.6970
 NZ                NZD=D3     0.6277         0.6286      -0.15%         -8.31%      +0.6293     +0.6276
 Dollar/Dollar                                                                                  
                                                                                                
    
All spots  FX= 
Tokyo spots  AFX= 
Europe spots  EFX=  
Volatilities  FXVOL=  
Tokyo Forex market info from BOJ  TKYFX 

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
World FX rates    https://tmsnrt.rs/2RBWI5E
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Tom Westbrook. Editing by Sam Holmes)
 ((tom.westbrook@tr.com; +65 6973 8284;))

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