The dollar rose against the euro and yen before a government report that may show U.S. inflation expedited last month, giving the Federal Reserve less reason to lower interest rates.
The dollar rose against 13 of the 16 most-active currencies as traders pared bets the Fed will reduce its benchmark rate by three-quarters of a percentage point next month. Crude oil traded below yesterday's record $100.10 a barrel in New York . The U.S. dollar index traded on ICE Futures in New York , which tracks the currency against its six major counterparts, grew 0.2 % to 76.1.
"There's a distinct possibility inflationary pressures could grow and grow,'' said Simon Derrick, the London-based head of currency strategy at Bank of New York Mellon Corp. "There is a risk we could see a high CPI number today.''
Consumer prices increased at an annual rate of 4.2 % in January from a year earlier, compared with 4.1 % the previous month. The Labor Department will release the report at 8:30 a.m. today in Washington .
Interest rate futures on the Chicago Board of Trade show a 4 % chance the Fed will lower rates by three quarters of 1 % to 2.25 at its March 18 meeting, down from 32 % odds a week ago. The remaining odds are for a half-point cutting.