The US Dollar Index ticked up 0.1% to 98.98, still within striking distance of last week’s three-month low

The U.S. dollar held in a narrow range on Wednesday as investors awaited key U.S. inflation data for clues on the central bank’s policy path, while the Australian dollar strengthened after hotter-than-expected domestic inflation revived bets on another rate hike.

The US Dollar Index ticked up 0.1% to 98.98 by 06:05 GMT, still within striking distance of last week’s three-month low.

Investors were awaiting the U.S. personal consumption expenditures (PCE) price index, the central bank’s preferred inflation gauge, due later on Wednesday, ahead of the Jackson Hole symposium this weekend.

The data could influence expectations for the central bank’s next policy move after markets have been weighing persistent inflation against concerns over U.S. government debt and the central bank’s independence.

The U.S. Treasury’s expanded debt buyback programme has eased some pressure on longer-dated yields, but analysts said it did little to address the underlying increase in government debt and interest costs.

The yen’s USD/JPY pair edged 0.1% lower to 158.97 yen.

The Canadian dollar remained under pressure on Wednesday, with the USD/CAD pair adding 0.2% to C$1.39.

The Australian dollar was among the stronger performers, with the AUD/USD pair rising 0.3% to $0.718 — its highest since early June.

Data on Wednesday showed the monthly consumer price index rose 1.0% in July, above forecasts for a 0.8% gain.

Markets lifted the probability of a fourth RBA rate hike this year.

Broader Asian currencies lacked a clear direction as easing Middle East tensions improved risk sentiment.

Brent crude dropped more than 2% to around $87 a barrel as Iran resumed talks with Oman over management of the Strait of Hormuz, while talks with the U.S. remained stalled.