Dollar Gains Amid Anticipation of U.S. Inflation Report

The dollar rose against European and Asian currencies ahead of a key U.S. inflation reading. Economists expect consumer prices to rise, impacting Fed rate cut expectations. Reports of China considering a weaker yuan further influenced currency dynamics, driven by anticipation of higher trade tariffs under potentially renewed U.S. leadership.

The dollar strengthened against European and Asian currencies on Wednesday, driven by market anticipation of the upcoming U.S. inflation report. Economists forecast a 0.3% rise in consumer prices, potentially disrupting the expected Federal Reserve rate cuts scheduled for December 18.

Influencing the currency dynamics further, a Reuters report suggested that China might allow its yuan to weaken in response to higher trade tariffs, potentially under another Trump presidency. This move could necessitate greater economic stimulus, affecting regional currencies.

In Asia, the dollar saw gains against the yuan and Japan's yen, while the Australian and New Zealand currencies hit lows. Market focus also turned to the Bank of Japan's potential rate hike, underscored by rising Japanese wholesale inflation.

(With inputs from agencies.)