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Forex

Dollar’s seven-month high ends; Aussie trims gains

forex

The dollar’s seven-month high run against an index of currencies ended on Wednesday after U.S. consumer prices showed a moderation in underlying inflation, prompting markets to trim bets on a December Federal Reserve rate hike.

The U.S. dollar’s index against a basket of six major currencies .DXY =USD stood at 97.846, off Monday’s seven-month high of 98.169.

The Australian dollar pared some of its earlier gains after a barrage of Chinese economic data. The overall reaction across major currencies was limited, however, as there were no huge surprises.

China’s third-quarter gross domestic product matched market forecasts, while September industrial production came in below expectations.

Hirofumi Suzuki, an economist for Sumitomo Mitsui Banking Corporation in Singapore said, “There was probably some profit-taking in the wake of the (Australian dollar’s) rise seen since yesterday”, adding that there may have been some reaction to the slightly disappointing data on industrial output as well.

Still, Suzuki said the Chinese data overall suggests that Chinese authorities still have solid control over the economy and that the risks of a sharp deterioration are limited. That bodes well for the Aussie dollar in the near term.

Paul

The author Paul