Dollar scales six month peak as US inflation comes in focus

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The U.S. dollar scaled a fresh 6-1/2-month peak against other major currencies on Wednesday and the Japanese yen fell to its lowest level since July, driven by so-called Trump trades ahead of key U.S. inflation data later in the day...

The dollar is reaping the benefits of Republican Donald Trumps victory in the U.S. presidential election last week, which sent the U.S. currency to its highest level since May 1 at 106.21 against a basket of currencies...

Investors are pricing in policies of lower taxes and new trade tariffs under the incoming administration, measures seen as inflationary which could prompt the Federal Reserve to curb the extent of its easing of interest rates...

The full magnitude of the threatened U.S. tariffs on global imports, the potential fiscal stimulus through tax cuts and deregulation, as well as data that points to U.S. economic strength continuing next year, are all supportive of the dollar, Kotecha said.. Focus on Wednesday will be on a fresh read on U.S. inflation, with the October Consumer Price Index (CPI) report due at 1330 GMT...

The core index is expected to have risen 0.3% in October, in line with previous months increase.. Evidence of a pickup in headline inflation amid a steady core CPI-inflation rate might boost the (dollar) even further across the board, strategists at Unicredit said in a note, adding that signs of disinflation are unlikely to significantly dent the dollars strength...

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