The producer price index for final demand in the United States rose 0.3% in November and 7.4% year-on-year, data showed on Friday, a slight surprise on the upside from earlier forecasts. an increase of 0.2% and 7.2%, respectively.
The British pound fell 0.27% to $1.22335 in early trading in Asia, while the Aussie edged down 0.34% to $0.6773.
The kiwi slipped by 0.37% to $0.6391.
“There was a bit of concern regarding how inflation would be sustainably high and encourage the Fed to hold policy tight even longer than expected,” said Carol Kong, currency strategist at Commonwealth Bank of Australia (CBA). ).
Traders also remained on their toes ahead of major risk events this week, including a series of major central bank meetings.
The Federal Reserve once once more takes center stage and is widely expected to hike rates by 50 basis points, although the focus is on the central bank’s updated economic projections and Fed Chairman Jerome Powell’s press conference.
“If he talks more regarding the risks to the economy […] I think it will probably be seen as dovish by the markets and of course the markets love the dovish comments and how the FOMC will pay more attention to downside risks in the economy,” Kong said. CBA.
The Bank of England and the European Central Bank (ECB) are also meeting this week, and they are also expected to each hike rates by 50bps.
“ECB officials told us they were more concerned regarding core inflation, which remained elevated,” Kong said of the ECB’s upcoming meeting.
“If they do a 50bp hike…they might follow with rather hawkish comments at Lagarde’s post-meeting conference.”
The euro was last down 0.1% at $1.0520.
Elsewhere, the dollar rose 0.12% once morest the Japanese yen to 136.73, and once morest a basket of currencies, the US Dollar Index gained 0.04% to 105.09.
The offshore yuan was lately up slightly at 6.9730 per dollar, buoyed by continued optimism that China is easing its strict COVID restrictions.
Ahead of the FOMC meeting, US inflation figures for November are due on Tuesday, with economists expecting core inflation to rise 6.1% year-on-year.
“The market’s reaction to US inflation surprises has been asymmetric so far in 2022, with downside surprises having a larger effect than upside ones,” Barclays analysts said.
“The inflation impression is likely to be the bigger driver of the two, (given) the Fed’s focus on smaller hikes,” they added, referring to the US dollar.