Dollar Ascends as Federal Reserve Patiently Awaits Inflation Report

The U.S. dollar climbed to a 10-week high against the yen as market confidence in the Federal Reserve's patient stance increased. Amid expectations of a stable inflation report and positive U.S. economic data, traders recalibrated rate cut bets. Meanwhile, China's fiscal moves may boost Asian currencies.

The U.S. dollar surged to a 10-week high against the yen on Thursday, fueled by market confidence in a patient Federal Reserve strategy ahead of a significant inflation report. As the dollar index hovered near an almost two-month peak, traders adjusted their expectations, minimizing bets on U.S. rate cuts amidst strong payroll data.

The American currency achieved 149.54 yen for the first time since August, briefly dropping to 149.11 yen. Concurrently, the euro remained steady against the dollar. Economists anticipated the consumer price index to reflect consistent core inflation, highlighting the Fed's focus on maintaining labor market health during its latest meeting.

Market momentum is now reevaluating the extent of impending Fed rate cuts. San Francisco Fed President Mary Daly expressed diminished concerns over inflation, pointing instead to maintaining labor market stability. Traders now reflect an 85% probability of a modest rate cut in November, compared to a previous certainty of a larger reduction. Additionally, Chinese fiscal policies are expected to bolster regional currencies.

(With inputs from agencies.)