By Gina Lee

Investing.com – The dollar was down on Wednesday morning in Asia, but remained near a two-decade high, ahead of U.S. inflation that could indicate how aggressively the Federal Reserve will tighten monetary policy.

This index, which tracks the greenback relative to other currencies, fell 0.06% by 11:23PM ET (3:23 GMT). It was just 0.6% away from the peak of 104.49, which it reached at the start of the week. This is the highest level since December 2002.

It fell by 0.06%, to 130.36.

The pair was up 0.27% to 0.6934, with Australia’s for May 2022 contracting 5.6%.

This pair went up by 0.25% to 0.6302.

The pair dropped 0.12% from 6.7266.

It edged up by 0.15%, to 1.2340

Euro traded at 1.05305 and has been trading mostly sideways ever since it hit a five-year high of 1.04695 at month’s end.

While the benchmark U.S. Treasury yields were unable to halt their recent rally, some yen gains continued. On Monday, Japan’s currency fell to an unprecedented 131.35, a low that was more than two decades ago.

For any indications that inflation may be cooling, investors will now wait for the U.S. CPI April figure. Forecasts by Investing.com predict an 8.1% annual rise. A day later, the PPI figure will be released.

The Fed’s benchmark overnight rate was raised by 50 basis point during the past week. It is the highest increase in 22 year, and investors are trying to anticipate how aggressive it will become. According to CME’s FedWatch Tool, markets are pricing in a Fed hike of 50 basis points or more at its June 2022 meeting.

In 2022, the greenback soared nearly 9% amid a Fed that is becoming more hawkish in its efforts to fight rising inflation.

Commonwealth Bank of Australia believes that there is a risk to more gains.

Joseph Capurso (CBA currency strategist) stated that the dollar would react to CPI in an unsigned note.

“A positive surprise will encourage markets to increase pricing for a 75 (basis point) increase in the Funds rate later in the year and support the dollar, while a negative surprise will keep pricing for 50bp increases in June and July intact and leave the dollar steady.” 4

According to the note, while the euro remains “heavy” above $1.05, a stronger CPI print could see the Australian dollar drop below $0.69.

Bitcoin was trading at $30.758.92 this week, after falling to $30,000 for the first-time since 2021.