The U.S. dollar index was little changed at 104.28, after hitting the highest since July 30 at 104.63 on Tuesday before closing the day almost flat
The dollar hovered close to a three-month high on Wednesday in a big week for macroeconomic data that could reveal the path for U.S. monetary policy.
The Australian dollar slid to a three-month low after some stickiness in inflation suggested a RBA interest rate cut is unlikely this year.
Mixed U.S. indicators overnight, showing a loosening U.S. jobs market but a confident consumer, provided little clarity on the outlook for Fed easing, allowing the dollar to drop with Treasury yields on Tuesday following a strong seven-year note auction.
Recently though, economic readings have pointed to a resilient economy, particularly for employment, spurring a paring back of bets on the pace of rate cuts. The ADP employment report is due later in the day, ahead of the potentially crucial monthly payrolls report on Friday.
The U.S. dollar continues to garner strong support as markets adjust their rate path expectations, according to James Kniveton, senior corporate FX dealer at Convera.
The American economy is currently firing on all cylinders, he said.
Meanwhile in Australia, “the increased inflation number in services is likely to mean rate reductions this year are a very distant prospect,” he added.
The RBA’s preferred inflation gauge, the trimmed mean measure, dropped to 3.5% from 4.0% in the third quarter, but service-sector inflation remained higher. On a quarterly basis, the gauge rose by 0.8%, topping forecasts for a 0.7% increase.
The Australian dollar declined as low as $0.6537 for the first time since August 8, before trading 0.27% lower at $0.6542 at 0531 GMT.
The U.S. dollar index was little changed at 104.28, after hitting the highest since July 30 at 104.63 on Tuesday before closing the day almost flat.
