*
Dollar slips after CPI print
*
Yen appreciates on rising prospect of BOJ hike
*
British inflation unexpectedly slows, boosting sterling
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China's yuan holds close to daily downside limit
(Updates to US morning, adds analyst comment, FX table)
By Laura Matthews and Alun John
NEW YORK/LONDON, Jan 15 (Reuters) - The dollar weakened
against major peers on Wednesday after cooler-than-expected data
eased fears that inflation was accelerating and increased the
chances the Federal Reserve could cut interest rates twice this
year.
The Bureau of Labor Statistics showed consumer prices
rose 2.9% in the 12 months
through December, in line with economists' expectations.
Core inflation, which excludes food and energy prices, came in
as expected, but lower than the previous month.
Softer core reading coupled with
producer prices data
on Tuesday triggered an immediate decline in the dollar.
The dollar index, which measures the greenback
against six other units, fell 0.2% to 109.02, pulling it further
away from the 26-month high of 110.17 it reached on Monday.
"While markets had previously scaled back expectations
for Fed easing, they responded to this data by pricing in more
rate cuts for this year," said Uto Shinohara, senior investment
strategist at Mesirow Currency Management in Chicago.
"The dollar has shown heightened sensitivity to economic
news in both directions recently ... as well as from recent
tariff rhetoric."
President-elect Donald Trump returns to the White House next
week, and analysts expect some of his policies to boost growth
as well as increase price pressures.
Meanwhile the dollar was last down 1% on the Japanese yen
at 156.41 yen.
The yen strengthened on Wednesday after comments from the
Bank of Japan Governor Kazuo Ueda, who said the central bank
would raise interest rates and adjust the degree of monetary
support if improvements in the economy and price conditions
continue.
Meanwhile, a cooling in British inflation offered relief to
the pound. Data showed inflation slowed unexpectedly last month
and core measures of price growth - tracked by the Bank of
England - fell more sharply - welcome news for finance minister
Rachel Reeves after a market selloff.
The British pound was up 0.3% at $1.2247
against the dollar in the U.S. morning session.
Helen Given, associate director of trading at Monex USA
in Washington, said the outsized moves in the pound and yen
pairs are driven more by news out of the other nations rather
than the U.S.
"We don't see it as likely, though, that Fed easing
expectations will move forward any further at least until the
central bank can get a handle on what the incoming
administration's trade and economic policies will do to domestic
inflation, but we could start to get some answers on scope and
scale of these policies as soon as next week," Given said.
Elsewhere, the euro slipped 0.1% to $1.0299.
Eyes were also on China, where the onshore yuan
was slightly flat on the day and was last at 7.3308 per dollar,
overall maintaining a generally weak bias despite a persistently
firmer than expected official guidance fix and signs of
tightness in domestic money markets.
Currency
bid
prices at
15
January?
03:53
p.m. GMT
Descripti RIC Last U.S. Pct YTD Pct High Low
on Close Change Bid Bid
Previous
Session
Dollar 59
Euro/Doll 288
Dollar/Ye 985
Euro/Yen 07
Dollar/Sw 77
Sterling/ 155?
Dollar/Ca 03
Aussie/Do 181
Euro/Swis 84
Euro/Ster 05
NZ 97
llar
Dollar/No 925
Euro/Norw 633
Dollar/Sw 971
Euro/Swed 697
(Reporting by Laura Matthews in New York and Alun John in
London; Additional reporting by Rae Wee in Singapore; editing by
Louise Heavens, Mark Potter and Mark Heinrich)
Line of Credit 
Print
