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The dollar fell, hitting a two-month low on Wednesday, July 12, against other major currencies ahead of the release of US inflation data, while the British pound rose to a 15-month high on expectations that the Bank of England will continue to raise interest rates.
The yen jumped to the highest level in one month, surpassing 140 against the dollar for the first time in a month, with support from falling US Treasury yields and bets on the Bank of Japan’s monetary policy adjustment at this month’s meeting.
Investors are heavily focused on US inflation data due later on Wednesday, as it is expected to show core inflation rising 5% year-on-year in June and provide more clarity on the US Federal Reserve’s steps to tackle inflation.
Prior to the release of the data, the dollar index, which measures the performance of the US currency against a basket of other major currencies, fell to a two-month low of 101.34, extending the losses it had recorded since the beginning of the week after Federal Reserve officials said the central bank was close to ending the monetary tightening cycle.
Against the yen, the dollar fell 0.7% to a one-month low, and the euro rose to a two-month peak of $1.10365.
The pound rose to a 15-month peak of $1.2970, supported by bets that the Bank of England will have to continue tightening monetary policy to tame British inflation, which is increasing at the highest rate among major economies.
US Treasury yields were under pressure, which provided some support for the yen.
The yen rose in the latest transactions by more than 0.65% at 139.47 per dollar, about to record a fifth session of gains in the longest series of gains in nearly seven months.
Analysts said the Japanese currency also benefited from expectations that the Bank of Japan will adjust monetary policy at this month’s meeting.
On the other hand, the New Zealand dollar rose 0.47% to $0.6227, and the Australian dollar rose 0.52% to $0.6722.
