The dollar falls as investors remain attentive to the inflation outlook

FILE PHOTO: A US one dollar bill is pictured in this illustration taken on July 17, 2022. REUTERS/Dado Ruvic/Illustration/File
FILE PHOTO: A US one dollar bill is pictured in this illustration taken on July 17, 2022. REUTERS/Dado Ruvic/Illustration/File

By Amanda Cooper

LONDON, Dec 12 (Reuters) – The dollar fell on Monday but losses were contained by data last week that showed wholesale inflation in the United States rose more than expected last month, reinforcing views that the The Federal Reserve may have to keep interest rates higher for longer.

* This week is one of the busiest for macroeconomic data so far this year, as four major central banks hold their final policy meetings of the year, along with consumer inflation data from the United States. United States, which could be decisive in determining the outlook for US interest rates and the dollar.

* The US Federal Reserve, the European Central Bank, the Bank of England and the Swiss National Bank will announce their decisions on interest rates.

* Sterling was down 0.1% at $1.225 after falling to a session low of $1.2207 and was down 0.1% against the euro at 86.01 pence after data showed that the British economy rebounded in October over Queen Elizabeth’s funeral holiday, but still pointed to a bleak picture.

* The euro pared losses from the Asian session and rose 0.2% to $1.0549. Europe’s single currency has gained nearly 8% so far in the fourth quarter as investors trusted the ECB to stick with an aggressive rate-hike policy.

* Those expectations have softened somewhat with money markets showing the ECB is most likely to raise rates by just half a percentage point this week.

* The Federal Reserve is expected to raise rates by the same amount after a series of 75 basis point hikes, especially given the tightness of the labor market and the reasonably resilient economy.

* Data on Friday showing that US producer prices rose 7.4% year-on-year in November, compared with forecasts for a 7.2% rise, reminded investors how hard it is proving to slow down. inflation.

* November consumer inflation data is due on Tuesday and is expected to show an increase of 6.1% in the core reading, which excludes food and energy prices, down from 6.3% in October. .

* Against the yen, the dollar was up 0.2% at 136.87 yen. The yuan in foreign markets was broadly stable at 6.9782 to the dollar, further pressured by concerns about a possible surge in COVID cases as China eases its strict COVID-19 restrictions.

(Reporting by Rae Wee; Editing in Spanish by Ricardo Figueroa)

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