U.S. One dollar note are shown in front of the stock graph on this illustration taken in this illustration.
On Thursday night, the dollar touched its lowest against major peers, taking a breather from a rally that held it to a one-year high powered by expectations for quicker Fed interest rate increases.
The dollar index, which measures the currency against six rivals, was about flat at 94.016, after dropping 0.53% on Wednesday, the most since 23 Aug. :
The index reached 94.563 on Tuesday, his highest since late September 2020, after hitting nearly 3% since early last month.
The dollar pulled back even after minutes of Federal Open Market Committee's September meeting confirmed tapering of stimulus is all but certain to start this year and showed a growing number of policymakers worried that high inflation could persist.
A Labor Department report showed that U.S. consumers prices rose solidly in September, and they are likely to rise further amid a surge in energy prices, potentially pressuring the Fed to act sooner to normalise policy.
The U.S. 5 year, 5 year-forward breakeven inflation rate, one of the more closely followed gauges of long-term inflation expectations, surged overnight to its highest level in seven years at 2.59%.
Most Fed officials, including Chair Jerome Powell, have so far contended that price pressures will be transitory.
Money markets are currently pricing in the area of 50 and 50 odds of the first 25 basis point rate hike by July.
The USD reaction might be an example of 'buy the rumour, sell the fact', Joseph Capurso, a strategist at Commonwealth Bank of Australia, wrote in a client note.
We consider FOMC's assumption of a transitory spike in inflation wrong. A more aggressive tightening cycle will support USD in our view. The dollar edged 0.11% higher to 113.37 yen but rebounded from the five-year peak of 113.80 yen hit overnight.
The euro was mostly flat from Wednesday at $1.1599, but touched $1.1601 for the first time since Oct. 5, for the flat currency since then in September 23rd.
During the exchange rate on Wednesday at $1.3665, the currency was small changed to hold Wednesday's advance of 0.5% and in close proximity of its highest level this month.