The U.S. dollar fell against a basket of major currencies on Wednesday ahead of important U.S. inflation data later in the day and amid worries of swelling budget deficit.
The dollar index slipped for a third straight session to 89.25, yet it recovered some of its losses to hover at 89.48.
Against the yen, it suffered a sharp tumble to a 15-month low of 106.83, while currently trading around 107.37.
Later in the day, eyes will focus on U.S. CPI inflation data, which may signal an ease to 2.0 percent in the year ended January from a previous of 2.1 percent. Yet, the month-on-month reading may have accelerated to 0.3 percent increase from 0.1 percent rise in December.
The stronger than expected wage growth should be tracked by a rise in inflation, and therefore investors will carefully watch the data to get clues about the Fed’s rate hikes path.
Still, there is uncertainty about the outlook of the world’s biggest economy as investors wary of a swelling budget deficit after the approval of huge tax cuts and spending plans.
The greenback fell yesterday after the announcement of President Donald Trump’s $4.4-trillion budget proposal that would raise U.S. deficit next year by nearly double last year’s projections to $984 billion and climb further to $7.1 trillion over the next decade.
After showing a strong rebound last week, the dollar has lost momentum this week in the wake of a volatile trading.
Global equities have recovered this week after sharp losses the previous
week, yet traders remain on edge ahead of U.S. inflation as the Fed is highly
anticipated to raise the borrowing cost next month.