The U.S. dollar fell to a two-month low against major currencies on Wednesday ahead of the release of key U.S. inflation data, while sterling hit 15-month highs following upbeat U.K. wage growth figures.
The yen strengthened past 140 per dollar for the first time in a month amid growing speculation that the Bank of Japan will modify its ultra-loose monetary policy at its upcoming meeting.
Investors were focused on upcoming U.S. inflation statistics, particularly the core consumer price index, which is forecast to show a 5% annual increase in June. The data could indicate the potential for further Federal Reserve interest rate hikes.
In anticipation, the dollar index dropped to its lowest level in two months, underperforming most sharply against the Japanese yen. The key figure will likely be the monthly change in the core inflation rate, which some expect could be just 0.2% in June based on declining used car prices and other indicators pointing to slowing inflation pressures.
The euro nudged up against two-month highs versus the dollar, while the Swiss franc hit a 2-1/2 year peak. Sterling jumped to $1.2970, a 15-month top, as markets bet on more Bank of England rate hikes to combat high UK inflation.
Meanwhile, falling U.S. Treasury yields weighed on the greenback. The New Zealand dollar fluctuated after the Reserve Bank of New Zealand kept rates steady and signaled they would stay on hold for some time.
