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The US dollar bounced back against major peers on Wednesday after weakening over the past three days with investors ramping up bets ahead of US inflation data which may heap pressure on policymakers to raise interest rates from record lows.
Falling yields for US Treasuries had put some downward pressure on the dollar lately but a rebound of about three basis points to 1.486 per cent for the 10-year government bond on Wednesday helped prop up the currency.
“The flattening fury in US bond yields has been replaced by a mild rebound this morning before US CPI”, commented Kenneth Broux, an FX strategist at Societe Generale.
“The dollar is better bid after profit taking of the last three days”, he said.
The US consumer price index, due later on Wednesday, is predicted by a Reuters poll of economists to come in at an annualised 4.3 per cent, versus the U.S Federal Reserve average annual 2 per cent inflation target.
The Fed last week restated its belief that current high inflation is transitory but many investors fear that underestimating the rise in prices could prove a costly policy mistake.
At 1205 GMT, the dollar index , which measures the greenback against six rivals, rose 0.33 per cent to 94.279 after falling from a more than one-year peak of 94.634 reached on Friday.
Against Japan’s yen the greenback came off lows last seen since Oct. 11 and rose 0.28 per cent to 113.195 yen.
