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Dollar retreats after inflation data disappoints

13 October 2017

The Australian dollar increased to $0.7785 from $0.7783.

On Thursday, the U.S. Department of Labor said its producer price index for final demand increased 0.4 percent in September.

The dollar index, which tracks the greenback against six major currencies, was down 0.19 percent at 92.883 after falling to a more than two-week low of 92.749. St. Louis Fed President James Bullard told Business Insider that there was "no hurry to raise rates" with inflation below target.

The dollar bought 112.35 Japanese yen, higher than 112.31 yen of the previous session.

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The readout of the meeting, at which the Fed announced it would begin this month to reduce its large bond portfolio mostly amassed following the financial crisis and unanimously voted to hold rates steady, also showed that officials remained mostly sanguine about the economic impact of recent hurricanes. Last month, the FOMC said that it would consider a December rate hike with possibly another three in 2018, however there is little certainty that that plan will come to fruition.

The BOJ chief said that though Japan's economy was moderately expanding, inflation and wage growth were still disappointingly low.

The dollar got some support versus the yen on Thursday when media polls showed Japanese Prime Minister Shinzo Abe's ruling bloc could keep its two-thirds "super" majority in an October 22 lower house election, reassuring investors that his "Abenomics" programme of yen-weakening easy monetary policy, fiscal spending and promised structural reforms would continue.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell 1 basis point to 2.83 percent, the yield on the 15-year note also slid 1 basis point to 3.11 percent and the yield on short-term 2-year traded flat at 1.95 percent by 03:05GMT.

Dollar retreats after inflation data disappoints