FOREX-Dollar languishes as focus turns to CPI, Fed speakers

The dollar languished on Wednesday as traders awaited ​fresh signals on the timing for interest rate hikes while finance chiefs gathered ​in Bangkok urged governments to get their financial houses in ‌order. The ​euro edged higher as European Central Bank President Christine Lagarde dashed expectations of intervention to prop up France's ailing bond market. The Aussie dollar rose following gains in Asian shares and strong trade data in China.

Attention now focuses on the release of US consumer ‌price index data as well as speeches from Federal Reserve policymakers that could clarify the outlook for interest rates. "The risk is the core CPI surprises to the upside because of strong consumer demand and higher costs, pushing up market pricing of an October Fed hike and the USD," Carol Kong, a currency strategist at Commonwealth Bank of Australia, said in a note.

The dollar index, which ‌measures the greenback against a basket of currencies, fell 0.09% to 102.09, following a 0.35% slide on Tuesday. The euro rose 0.09% at $1.1208. The yen climbed 0.08% to 158.19 per ‌dollar. Sterling strengthened 0.15% to $1.3272.

The dollar slid on Tuesday after comments that were interpreted as dovish from New York Fed President John Williams and Fed Governor Christopher Waller. Fed officials Thomas Barkin and Michelle Bowman are due to speak later on Wednesday. Traders see a 77% chance that the Fed will leave rates unchanged at its October 27-28 meeting, up from 51% a month ago, while pricing in about 75 basis points of tightening by late 2027, ⁠CME Group's ​FedWatch Tool showed.

The US Labor Department is ⁠due to release its CPI for September, which is expected to have risen 0.6% month-on-month after increasing 0.4% in August, while annual inflation is seen accelerating to 3.6% from 3.4%. Additionally, the Fed is due to publish its ⁠Beige Book. "Risks to headline inflation are skewed to the upside," Bansi Madhavani, senior economist at ANZ, said on a podcast. "So we remain of the view that the (Fed) will raise rates by a further 50 basis ​points in the months to come."

A host of global finance chiefs are in Bangkok, where the International Monetary Fund and World Bank are holding annual meetings. IMF ⁠fiscal affairs chief Rodrigo Valdes said the body has "dialed up" the urgency of its call for governments to rein in growing debts, while the IMF's Kristalina Georgieva said the US needs to make fiscal adjustments to put its debt ⁠on ​a more sustainable path. French bonds have been among the worst hit by a recent global selloff, with investors concerned that political jostling ahead of next year's presidential election may hinder efforts to reduce its high deficit.

The ECB's Lagarde said at a CNN event in Bangkok that France should solve its debt woes through fiscal consolidation, damping speculation about whether the central ⁠bank might start buying French bonds. The Financial Times reported on Wednesday that British finance minister John Healey is expected to pay for all new giveaways in this month’s budget with higher ⁠taxes or spending cuts rather than more borrowing. ⁠The IMF is not recommending that Britain speed up its fiscal consolidation, a senior official of the body said.

Data on Wednesday showed China's exports soared 36.3% in September from a year earlier, far exceeding expectations. Imports jumped 31.0% last month. The Australian dollar strengthened 0.3% versus the greenback ‌to $0.7001, while the kiwi climbed ‌0.29% to $0.5625.

In cryptocurrencies, bitcoin gained 0.41% to $83,690.94, and ether rose 0.18% to $2,513.69.