Dollar recovers ground vs yen; euro steadies after inflation data
The dollar regained ground against the yen, recovering from Monday's selloff, even as expectations for a December rate hike by the Bank of Japan lingered, while the euro edged up after data on Tuesday showed euro zone inflation was slightly hotter-than-expected.
The greenback rose 0.3% against the yen to 156.00, after hitting a two-week low on Monday, following a sale of 10-year Japanese government bonds which saw the strongest demand since September.
Stocks, bonds, cryptocurrencies and the dollar all tumbled on Monday after Bank of Japan Governor Kazuo Ueda said that the central bank would consider the "pros and cons" of raising interest rates at its next policy meeting, sending Japanese two-year yields above 1% for the first time since 2008 and prompting a spillover into global bond markets.
Data on Monday showed weaker-than-expected manufacturing data from the U.S., heaping pressure on the Federal Reserve to cut interest rates this month.
Fed funds futures are pricing an 87% probability of a 25-basis-point cut at the Fed's next meeting on December 10, compared with a 63% chance a month ago, according to the CME Group's FedWatch tool.
INFLATION WATCH
The euro was 0.1% higher at $1.16200 after data showed inflation in the 20 nations sharing the euro accelerated to 2.2% last month from 2.1% in October, a small rise that is unlikely to be too concerning for the European Central Bank.
Inflation in the euro zone is practically at the ECB's 2% target, ECB policymaker Joachim Nagel said in an interview published on Tuesday.
Sterling edged 0.1% lower to $1.3207 , having touched its highest level in a month on Monday.
The Bank of England cut the amount of capital it estimates lenders need to hold in a bid to boost lending and stimulate the economy in the first reduction to bank capital requirements since the financial crisis.
Source : Reuters.com
