Dollar Greenback edges higher as markets await US inflation data

The dollar edged higher in Asian trading on Wednesday as renewed attacks on shipping routes in the Middle East added to market uncertainty ahead of key US inflation data.

The dollar rose 0.1% against a basket of six major currencies to 99.89. Investors are closely watching the US consumer price index (CPI), due later on Wednesday, for clues about the Federal Reserve’s interest-rate plans.

The yen weakened 0.1% against the dollar to 159.44. It reached its weakest level of the month despite recent joint intervention by US and Japanese authorities aimed at supporting the Japanese currency.

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The euro slipped 0.1% to $1.1534, while the British pound held steady at $1.3505. The Australian dollar fell 0.1% to $0.7056.

The New Zealand dollar declined 0.3% to $0.5866. The move followed Prime Minister Christopher Luxon’s announcement that he had secured a confidence vote from lawmakers in his ruling party.

Markets remain focused on the US inflation figures. Last week’s weaker-than-expected jobs data increased expectations that the Federal Reserve could adjust interest rates, although uncertainty remains.

ING analysts said inflation could ease through the rest of 2026 if oil prices remain contained and the Strait of Hormuz reopens. They added that markets were already pricing in a relatively mild inflation outcome.

DBS analysts said a weaker-than-expected CPI reading could prompt investors to reduce long-dollar positions against the New Zealand dollar, euro and yen.

Oil prices also moved higher during Asian trading. Brent crude rose 0.9% to $89.69 a barrel after an attack on a cargo ship in the Bab el-Mandeb Strait and a US military strike on a container ship off Pakistan.

The latest incidents have increased concerns about disruptions to vital shipping routes and their potential impact on global energy prices.

Chicago Federal Reserve President Austan Goolsbee said on Tuesday that the central bank remained more concerned about elevated inflation than weakness in the labour market.

However, traders remain divided over the Fed’s next move. Federal funds futures indicate roughly a 50% probability that policymakers will leave rates unchanged at their September meeting, with a similar probability of a 0.25 percentage-point increase.

In cryptocurrency markets, bitcoin remained broadly unchanged at $63,721.02. Ether gained 0.3% to $1,887.13.