Tom Westbrook

SYDNEY, (Reuters) – The dollar hovered a bit below its peak on Tuesday. However, cryptocurrencies climbed records as cryptocurrencies face inflation numbers that will be the next challenge for traders’ views on the future of interest rates.

Both China and the United States will release price data on Wednesday. This could test central banks’ patience. The numbers will likely show significant pressure on China’s factory gate price, according to economists. This is because it can move through the global supply chain and U.S. consumers prices are moving ahead.

The dollar fell overnight due to inflation expectations, especially against New Zealand dollars, but is still within reach of Friday’s highs.

After Friday’s solid U.S. job figures, the euro fell to $1.15135, a 15% drop in one month. The euro remained at $1.1588.

Just above 113 yen, the greenback remained steady. It had fallen 0.7% overnight, as traders remain wary of the possibility of the Reserve Bank of New Zealand raising rates by 50 basis points (bps), later in the month.

Last time the kiwi stood steady was at $0.7162.

In a note, ANZ analysts stated that “If RBNZ wants to raise by 50bps”, now is the right time.

It is still difficult to reconcile this with the unpredictability of the global environment and the cautious tone adopted by other central banks. Markets will still price the risk until they know what the outcome is.

Risk-sensitive Australian dollars also strengthened overnight, holding most of Tuesday’s modest gain at $0.7410. The steady level was 94.095. This is in the middle of the range that it maintained through October.

This is often referred to as an inflation hedge. It rose to $67700 in Asia trade and pulled ether to a record $4800.

Sterling had been hammered by the Bank of England’s surprise announcement last week that it was holding rates steady. However, sterling recovered on Monday after world bond markets retreated from aggressive wagers about higher rates.

After falling to $1.3425 Friday, Sterling fell as low as $1.3561 on Friday.

Prior to the data, several central bankers will speak on Tuesday. They include Christine Lagarde, President of European Central Bank, at 1300 GMT, and Jerome Powell, Fed Chair, at 1400 GMT.

Along with the Bank of England Surprise, last week’s Reserve Bank of Australia, and Federal Reserve, reacted to markets’ ambitious hike projections. Some of this edge was also removed from rates’ pricing.

Fed funds futures have delayed rates lifting-off from about July to September next year. Standard Chartered analysts (OTC) expect a rise in the third quarter next year but a gradual climb thereafter.

We suspect the debate about rate increases will slow down for a time. In a note, John Davies and Steve Englander said that central banks who provide guidance in advance discourage investors from making pricing decisions too soon.

We expect Fed officials not to stop repeating the fact that rates hikes are unlikely until it is later in the year.

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Exchange rate bid prices starting at 0051 GMT

Description: RIC U.S. Last Close Pct. Change YTD High Bid Low

Previous changes

Session

Euro/Dollar

$1.1580 $1.1587. -0.05%. -5.22%. +1.1591. +1.1581

Dollar/Yen

113.1900 113.2250 +0.00%+9.62% +113.2800 =0.0000

Euro/Yen

131.08

Dollar/Swiss

0.9138 +0.02% +3.29%+0.9140 +0.9128

Sterling/Dollar

1.3552 1.3566 1.3566 -1.0.10% 0.0.80% +1.3567.

Dollar/Canadian

1.2454 1.2441 +0.11%-2.19%+1.2455+1.2442

Aussie/Dollar

0.7398 0.7423 0.383% +0.7423 0.0.7397

NZ

Dollar/Dollar 0.7151 0.7168 -0.22% -0.40% +0.7165 +0.7152

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