USD Stuck near 5Month Low, Caution Reigns ahead of U.S. CPI

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The dollar hovered near a fivemonth low versus major peers on Thursday as investors looked to U.S. inflation data and a European Central Bank meeting later in the day to provide a spur for lacklustre currency markets.

Investors have adopted a waitandsee attitude all week, sucking volatility from the market and leaving major currencies mostly rangebound.

The dollar index has fluctuated narrowly around the psychologically important 90 level, and was last at 90.206 not too far from last months low of 89.533, a level not seen since early January.

The euro rose to a oneweek high at 1.2218 on Wednesday only to finish little changed, and was mostly flat at 1.21635 in Asia.

The yen traded at 109.565 per dollar, also little changed from Wednesday and near the middle of the 109.19110.325 range of the past two weeks.

Deutsche Banks Currency Volatility Index languished at its lowest level since February 2020.

The U.S. Labor Departments consumer prices data has been much anticipated after last months report showed consumer prices increased by the most in nearly 12 years in April.

That has stoked bets that higher prices could last longer than some anticipate, potentially calling into question the Federal Reserves insistence that current inflation pressures are transitory and monetary stimulus should stay in place for some time yet.

Economists polled by Reuters estimated the CPI advanced 0.4 in May.

Westpac analysts side with Federal Open Market Committee FOMC officials in the…

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