Ammon News - The dollar hovered near a one-week low on Wednesday as traders bet U.S. consumer price data later in the day will keep the Federal Reserve on course to cut rates next month, while sterling eased after softer-than-expected inflation numbers.

New Zealand's dollar dropped more than 1% after the Reserve Bank of New Zealand reduced the key cash rate and flagged more cuts to come in a sharp dovish shift.

Traders were largely cautious ahead of U.S. inflation data at 1230 GMT (8:30 a.m. ET), which is expected to show consumer prices increased 0.2% in July, on a month-on-month basis, following a 0.1% decline a month ago.

The dollar index - which measures the greenback against other major currencies - dipped 0.1% to 102.52, after slumping 0.5% on Tuesday when a slower-than-expected rise in producer prices reinforced hopes of a U.S. rate cut next month.

The dollar's weakness helped the euro hit a seven-month high of $1.1010, surpassing the high hit during the market turmoil on Aug. 5.

"Traders are positioning for a weaker CPI number, which of course (poses) a risk that if the CPI comes in line or little bit with an upside surprise, the dollar is going to go strong again," said Volkmar Baur, FX analyst at Commerzbank.


Reuters