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Dollar Loses Ground Against Major Counterparts Ahead Of Inflation Data

After staying weak during the Asian and European sessions, the U.S. dollar moved higher in early New York session on Monday, but turned weak soon and remained subdued thereafter as investors looked ahead to crucial inflation data for clues about the outlook for Federal Reserve’s interest rates.

The dollar also reacted to news credit rating agency Moody’s has lowered its outlook for the U.S.’ credit rating to negative from stable amid concerns about a possible government shutdown.

Moody’s reaffirmed the U.S. credit rating at Aaa but said it “expects that the U.S.’ fiscal deficits will remain very large, significantly weakening debt affordability.”

In economic news, a report from the New York Federal Reserve showed a modest decrease in consumer inflation expectations.

The New York Fed said inflation expectations declined at the one-year and five-year ahead horizons in October, falling to 3.6% from 3.7% and to 2.7% from 2.8%, respectively.

Overall trading activity remained somewhat subdued, however, as traders looked ahead to the release of key inflation data in the coming days.

U.S. CPI data due Tuesday is expected to show inflation easing to a year-on-year rate of 3.3% in October from 3.7% in the prior month.

The dollar index, which advanced to 105.96, dropped to 105.59 around noon, and was last seen at 105.66, down 0.19% from the previous close.

Against the Euro, the dollar weakened to 1.0700 from 1.0686. Against Pound Sterling, the dollar eased to 1.2280, giving up nearly 0.5% from 1.2227.

The dollar gained against the Japanese currency, fetching 151.67 yen a unit. Against the Aussie, the dollar slipped to 0.6379. The greenback weakened to CHF 0.9015 against Swiss franc, and is little changed against the loonie at C$ 1.3807.

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