Dollar falls ahead of US inflation data; euro rises

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The dollar fell to its lowest level in more than two weeks against a basket of currencies on Monday after recent strong gains, as investors grew nervous ahead of U.S. inflation data. United States and because central banks elsewhere seemed increasingly aggressive.

* The euro rose to a more than three-week high against the dollar, as European Central Bank officials advocated more aggressive monetary tightening.

* Strategists said Tuesday’s release of the U.S. Consumer Price Index monthly report will be closely watched for clues about how aggressive the Federal Reserve needs to be in raising interest rates next week, amid of its fight against high inflation.

* The Federal Open Market Committee – which implements the Federal Reserve’s policy – is expected to raise the benchmark interest rate for central bank overnight loans again from the current range of 2.25%-2, 50% at their meeting on September 20 and 21.

* The dollar index , which measures the currency’s performance against six major counterparts, strengthened on expectations of a hawkish Fed and hit a two-decade high of 110.79 on Wednesday. On Monday, it was down 0.4% at 108.31, after hitting its lowest since August 26.

* “It’s been a break in the dollar’s relentless advance,” said Joe Manimbo, senior market analyst at Convera. “What’s behind it is basically an improved risk sentiment, aggressive central banks abroad and hopes that US inflation suggests the worst is over.”

* “One of the things that has helped limit bouts of dollar weakness is signs of resilience in the US economy,” Manimbo added.

* The New York Federal Reserve’s monthly survey showed on Monday that US consumers’ inflation expectations dipped further in August as gasoline prices continued their steep decline from June’s all-time high.

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* This development is likely to relieve US central bank officials, who worry that the highest inflation in the last 40 years could change the perception of consumers about the persistence of the current price shocks.

* The euro rose 0.7% to $1.0117.

* ECB officials see growing risks of having to raise their benchmark interest rate to 2% or more to curb record inflation in the euro zone, sources told Reuters.

* The pound gained 0.8% to $1.1681, falling off last week’s 37-year low. The dollar rose slightly against the yen to 142.75 yen, after hitting a 24-year high of 144.99 last week.

* In cryptocurrencies, up 2.69% at $22,422.00, while  was down 2.3% at $1,726.

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