Peter Nurse

Investing.com. The dollar edged higher Wednesday morning as producers price inflation data in the U.S., China, and investors were aware that U.S. consumer prices inflation, data for which are due later, is at a 30 year high.  

At 2:55 AM ET (0755 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.2% higher at 94.130, still some way before Friday’s peak of 94.645, its highest level for over a year.

The stock market fell 0.2% at 1.1568 and rose 0.2% at 113.09 on Tuesday. This is still within a few points of Tuesday’s low level of 112.73, which was last seen Oct. 11.

Global stocks have fallen from records, resulting in a surge of the safe-haven greenback. Fears of contagion due to China’s worries about its property markets are increasing after Fantasia Holdings, a developer warned Wednesday that it may not be able meet its debt obligations.

The country’s biggest developer China Evergrande Group also faces its biggest solvency test yet Wednesday, with over $148 million of coupon payments due on three dollar bonds. 

However, all eyes will be on U.S. October data later in the season after U.S. continued to rise on Tuesday. Market participants were reminded by this that inflation continues to be a concern, and that the Federal Reserve will have to determine when to raise interest rates once the economy is recovering.

According to economists, the headline October CPI Index will increase 0.4%. That’s an acceleration from the 0.2% monthly rise. Meanwhile, the year-on–year core measure, closely monitored by the Fed, is likely to see a gain of 0.4%-4.3%. That’s well beyond the Fed’s average annual inflation target 2%.

At the recent meeting of policy-setting, Federal Reserve stated that it was too soon to increase rates. A view which San Francisco Fed President Mary Daly reiterated this week.

By contrast, St. Louis Fed President James Bullard took a more hawkish view, calling for  two rate hikes in 2022.

Bullard, in an interview with Fox Business Network Monday said that “if inflation is more persistent then what we are saying at the moment,” and suggested that we should take action to reduce inflation. 

Other markets edged up to 6.3935, after China’s data revealed that October was the 26th anniversary of its highest month.