Dollar is heading for the largest monthly loss since 2010

The dollar fell from its highest level in a week on Wednesday ahead of a speech by Federal Reserve Chairman Jerome Powell on Wednesday, while optimism about easing strict Covid restrictions in China put it on track for its biggest monthly loss in more than a decade.

The euro did well, rising as much as 0.3 percent, ahead of euro zone inflation data that could show the first slowdown in inflation since June last year.

The coordinated inflation rate is expected to have risen to 10.4 percent in November, down from a final reading of 10.6 percent in October. The rate is still more than five times higher than the European Central Bank’s target. But markets would welcome any sign that the worst may be over after nearly two years of relentless acceleration in inflation.

European assets got a boost on Tuesday after data showed a slowdown in inflation in Spain and a number of large German states.

The euro was last up 0.2 percent at $1.0348, after hitting a one-week low earlier on Wednesday at $1.0319. And the euro rose against the pound sterling 0.1 percent to 86.46 pence.

The dollar index, which measures the performance of the foreign currency against six major currencies, fell 0.22 percent to 106.64, down from a high of 106.90 on Tuesday night.

The dollar index fell about 4.3 percent in November, its biggest monthly loss since June 2010, as investors raised bets that inflation had peaked and the US central bank would soon take a softer stance on monetary policy.

Powell will deliver his speech at the Brookings Institution in Washington at 1830 GMT, addressing the economic outlook and the jobs market, while private sector employment data for November is due at 1315 GMT.

The dollar rose 0.1 percent against the yen to 138.75 yen.

The pound settled at 1.1962 dollars.

On the other hand, China’s manufacturing sector data came in weaker than expected as the government’s “zero Covid” policies continue to undermine economic activity.

The offshore yuan rose against the dollar, which fell 0.1 percent to 7.1483 yuan.