The Australian dollar rose against the US dollar after a Reserve Bank of Australia deputy governor warned about the inflation outlook. The dollar index slipped as traders waited for next week's Federal Reserve meeting.
The Australian dollar gained 0.41% to $0.7031 on Wednesday, lifted by hawkish comments from the Reserve Bank of Australia. Deputy Governor Andrew Hauser told a Citi conference that the inflation outlook looked "materially worse."
Dollar slips ahead of the Fed
The dollar index fell 0.14% to 101.65, while the euro rose 0.01% to $1.1237. Traders weighed renewed oil-driven inflation risks and waited for the Fed meeting next week.
The ongoing US war with Iran has increased fears that oil-driven inflation could affect Fed policy. Fed funds traders see only a small chance of a hike next week, and the next increase is expected in December.
Scotiabank chief FX strategist Shaun Osborne said markets lack an overarching theme and that this is likely to last at least until the FOMC meeting. However, he expects some assessment of the timing of future rate moves to firm up next week.
Sterling firms, euro stays under pressure
Sterling rose 0.16% to $1.34 after data showed UK inflation rose more than expected last month. That strengthened the case for a Bank of England rate increase in November.
The euro has been weighed down by anti-government protests in France and a worsening fiscal outlook. French 10-year borrowing costs reached 24-year highs on Wednesday.
Source: Reuters via Investing.com
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