FOREX-Dollar gains on euro after inflation data, sterling falls

Reuters

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      Dollar rebounds, up for the quarter but down for the week
    

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      U.S. data shows still red-hot inflation  
    

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      Euro zone inflation comes in at 10% for September
    

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      Talk of yuan intervention aids Chinese currency
    

  
 (Updates to U.S. trading hours, adds commentary, previous
dateline LONDON)
    By Sinéad Carew
       NEW YORK, Sept 30 (Reuters) - The dollar gained against
the euro on Friday after European inflation hit a record high
and U.S. consumer spending increased faster than expected.
    But while the dollar was on track for its biggest quarterly
gain since 2015 it was headed for its first weekly decline in
three weeks.
    Sterling fell against the dollar after three sessions of
gains followed wild declines on concerns about Britain's plan to
slash taxes and pay for it with more borrowing. After hitting a
record low on Monday, the pound was on track for a weekly gain
after the Bank of England bought British government bonds, known
as gilts, on Wednesday, Thursday and Friday.  GBP/   urn:newsml:reuters.com:*:nS8N30J04O
    Data on Friday showed euro zone inflation zoomed past
forecasts to hit 10.0% in September, reinforcing expectations
for another jumbo European Central Bank rate hike next month. 
    The pound, after touching $1.1235  GBP=D3 , was last down
0.06% on the day at $1.1112.
    The euro was down 0.3% at $0.9782. The greenback was up
0.13% against a basket of major currencies  .DXY  and on track
for its biggest quarterly gain since the first quarter of 2015,
recently showing a 7.3% gain. 
    But on a weekly basis the index was set for its first
decline in three, last down 0.73%. 
    The U.S. Federal Reserve, which has raised U.S. borrowing
costs faster in 2022 than any time since the 1980s, got one less
reason to slow down. The Commerce Department said the personal
consumption expenditures price index (PCE), which the Fed
targets at 2%, rose 6.2% year-on-year in August.  urn:newsml:reuters.com:*:nL1N31115S
    "The inflation data today surprised higher once again. That
will keep upward pressure on interest rates and the dollar,"
said Adam Button, chief currency analyst at Forexlive, a
currency analysis firm in Toronto.
    But on the last day of the quarter Button noted that
"fundamental considerations often take a back seat", as
investors work to balance their positions or take profits.
    Foreign exchange volatility has surged recently as investors
have been worried about inflation and economic growth in the
face of aggressive global monetary tightening. Also fraying
nerves has been the Britiah mini-budget fallout and concerns
about escalation in the Russia-Ukraine war. 
    In a sign of the rush for the safety of the dollar, demand
for the U.S. currency in derivative markets surged on Friday to
its highest since the COVID-19 crisis in 2020.  urn:newsml:reuters.com:*:nL8N3112S5
    So far this year, the dollar index has soared about 17%. For
the month, the index was on track for a 3.4% gain, its strongest
since April.    
    "We have seen some dollar selling into the latter portion of
this week – but it feels like nothing more than some profit
taking before another run to the top side, rather than any sign
that the USD is actually topping out," said Joel Kruger, market
strategist at LMAX. 
    The dollar was up 0.07% against the yen at 144.560
 JPY=EBS , and has been mostly tracking sideways below the
psychological 145 line since early September and since Japanese
officials stepped in to conduct their first yen buying
intervention since 1998 last week.
    Elsewhere, China's yuan on Friday briefly recouped losses
from earlier in the week after Reuters reported the central bank
had told major state-owned banks to be ready to support the
currency in offshore trading  CNH=EBS .  urn:newsml:reuters.com:*:nL1N311097
    The Swiss franc fell after the Swiss National Bank said it
had intervened in the foreign exchange market in the
second-quarter to support the currency. The dollar  CHF=EBS 
rose 0.54% versus the franc.  urn:newsml:reuters.com:*:nL8N3111MT
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World FX rates    https://tmsnrt.rs/2RBWI5E
Global markets in 2022    https://tmsnrt.rs/3RoWdKn
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 (Reporting by Sinéad Carew, additional reporting by Gertrude
Chavez-Dreyfuss in New York, Tommy Reggiori Wilkes in London;
Additional reporting by Kevin Buckland in Tokyo; Editing by
Robert Birsel, Chizu Nomiyama and Alex Richardson)
 ((sinead.carew@thomsonreuters.com))

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