US Dollar is falling ahead of the announcement of US inflation data

The dollar fell on Tuesday ahead of the release of highly anticipated US inflation data, while the yen rose on the surprise selection of the new governor of the Bank of Japan, Kazuo Ueda.

The British Pound rose after UK jobs data showed basic wage growth accelerating, but the labor market softened.

Markets are awaiting inflation data in the United States in search of a clearer view of the Federal Reserve’s interest policy expectations.

The dollar index, which measures the performance of the US currency against a basket of currencies, fell 0.19 percent to 103.02 points by 0900 GMT. The index fell 10 percent after touching a 20-year high in September.

The US central bank raised interest rates earlier this month by 25 basis points, but said it had passed the most difficult stage in its battle on inflation.

Sterling rose 0.32% to $1.2179 after data showed that the pace of growth in basic wages in Britain accelerated again in the final three months of 2022.

The euro rose 0.23 percent to $1.0750 ahead of the release of employment data in the euro zone today.

In Japan, the government appointed academic Kazuo Ueda as its new central bank governor, and investors are betting that the sudden choice could hinder an end to its unpopular yield curve control.

The yen rose 0.31 percent to 132.00 per dollar. The Japanese currency plunged last year to its lowest level in 32 years at 151.94 per dollar with US interest rates rising and Japanese interest rates remaining near zero, but it has recovered from those losses since then with the Federal Reserve looking to temporarily halt monetary tightening while speculation is growing that The Bank of Japan abandons its ultra-loose policy.

Data on Tuesday showed that the Japanese economy avoided recession, but recovered much less than expected in October and December as business investment fell, meaning that getting out of stimulus will be a challenge for the Bank of Japan.