Sterling declines as attention shifts to US inflation

 Sterling declines as attention shifts to US inflation

In mild holiday trade, sterling managed to hold onto its losses ahead of Friday's critical publication of US inflation data—the last significant data point of the year.

In mild holiday trade, sterling managed to hold onto its losses ahead of Friday's critical publication of US inflation data—the last significant data point of the year.

In front of Friday's US inflation statistics, the last significant data release of the year, the yen strengthened during holiday trade while sterling trimmed losses on Thursday.

On Wednesday, the British pound had its worst decline against the US dollar in two months as October's annual 3.9% rate was below forecasts, marking a two-year low for inflation.

The euro dropped 0.7% to $1.2638 as speculators anticipated a Bank of England rate decrease in May. In the Asia session on Thursday, there were just slight changes that were last purchased at $1.2639.

The pound's value vs the euro dropped to its lowest point in almost three weeks at 86.68 pence, and it was last trading close to that level at 86.59. After peaking at £0.5355 six months ago, the Australian currency was trading at £0.5334. [GBP/]

When the US core personal consumption expenditure (PCE) data is released on Friday, analysts expect a similar reduction. The annual inflation rate dropped to 3.3%, the lowest level since 2021.

However, any more dollar selling is put on hold for the time being given that the dollar has been weakening for a few weeks and that the Federal Reserve has already predicted a 150 basis point rate decrease for 2024.

"Before (this) event, it only makes sense to make some adjustments to the positioning and reduce risks," said Christopher Wong, Singapore's OCBC currency strategist.

"As the holiday season draws near, liquidity is getting scarcer. This could exacerbate price movements in response to any unexpected data."

Even while stock futures held firm, heavy selling during the last hour of Wall Street equities trading sent a wave of risk aversion throughout markets, impacting trade in Asia.

The safe-haven yen gained strength due to the mood, and Japan increased its fiscal year growth prediction to 1.6%.

The recent trading price of the yen was 142.86 per dollar, up around 0.5%. Despite a 300 basis point rise in U.S. interest rates, the Bank of Japan has continuously maintained negative short-term rates, which has caused the dollar to decline by more than 8% this year.

At $1.0952, the euro remained stable.

The five-month high for the Australian and New Zealand dollars was being traded just lower. The Australian dollar was trading at $0.6753 as of yesterday, having reached its highest level since July at $0.6779. At $0.6251, Kiwi was trading. [AUD]

The dollar index was little lower in Asia at 102.29, down 1% so far this year. Overnight, the yield on ten-year Treasury notes fell to 3.847%, a seven-month low.

The decline in offshore yuan finance rates caused China's currency to weaken and its blue-chip stock index to approach a five-year low. The most recent value was 7.1463 vs the USD. [CNY/]

On Wednesday, Bitcoin surged momentarily beyond $44,000 and remained stable around $43,598 on Thursday. Prior to the central bank's policy announcement, the value of Indonesia's rupiah in relation to the dollar remained stable in developing markets at 15,525.

The currency bid price at GMT 0541