Fed talk keeps dollar tied as focus remains on inflation

Fed talk keeps dollar tied as focus remains on inflation

LONDON - The U.S. dollar hovered above a 2-1/2-month low versus major peers on Wednesday, as traders hung on to bets that the Federal Reserve would remain steadfast in its easy policy settings ahead of data expected to show a sharp rise in annual U.S. inflation. Analysts forecast figures due at 1230 GMT to show a 3.6% lift in year-on-year prices, boosted by last April's low base. The month-on-month forecast is for a modest 0.2% rise. "We further expect that the release would highlight that, in addition to base effects in commodity prices, the U.S. inflation spike is driven by factors with greater staying power that could result in a more persistent inflation overshoot than expected by the Fed at present," said Valentin Marinov, head of G10 FX research at Credit Agricole. "This should, at least in theory, boost U.S. Treasury yields, help the dollar regain some ground and even rattle the global risk appetite." Higher numbers might add pressure on the Fed to bring forward rate rises, a worry which has contributed to a selloff in rate-sensitive tech shares this week. But currency markets have been soothed by repeated promises of patience from Fed speakers and the dollar has