The U.S. dollar found a foothold on Wednesday, halting a recent decline and causing a minor pullback in the British pound as markets await crucial U.S. inflation figures and central bank policy decisions.
The euro maintained its position near a two-week peak as traders fully anticipate a 25-basis-point interest rate hike from the European Central Bank. Meanwhile, the U.S. dollar traded in a tight range as investors awaited key inflation data.
The European Central Bank is set to raise interest rates by 25 basis points this week, but analysts at Citi believe the move is already fully priced in by markets, which could cap any significant gains for the euro.
The benchmark 10-year U.S. Treasury yield surged past the key 5% psychological level on Friday after August's Consumer Price Index report came in hotter than expected, bolstering expectations for an imminent Federal Reserve rate hike.
The British pound held steady against the U.S. dollar, largely ignoring better-than-expected domestic growth data as investors focused on an upcoming U.S. inflation report that could solidify the case for another Federal Reserve rate hike.
The Canadian dollar weakened slightly against its U.S. counterpart, as the traditional support from strong oil prices was offset by investor caution ahead of crucial American inflation figures.
The British pound was little changed despite a surprise uptick in UK economic growth, as currency markets focused on upcoming U.S. inflation data expected to cement the case for another Federal Reserve rate increase.
Euro zone government bond yields surged, with Germany's benchmark 10-year yield nearing its highest level since 2011. The sell-off, now in its fifth week, is fueled by a recent European Central Bank rate hike and rising oil prices stoking inflation fears.
The U.S. dollar held near a one-week high, pressuring most Asian currencies and weakening the Japanese yen, as traders braced for crucial U.S. inflation data and upcoming policy decisions from the Federal Reserve and Bank of Japan.
