The dollar fell against most currencies in volatile trading on Thursday, after spiking early following a hotter-than-expected U.S. inflation report, as some investors thought the market's initial response to the data was excessive.
The greenback briefly hit a 32-year peak against the yen of 147.665 after the data, then pared gains to trade up 0.2% at 147.25 yen.
Data showed U.S consumer prices increased more than expected in September and underlying inflation pressures continued to escalate, cementing expectations the Federal Reserve will deliver another 75-basis-point rate increase at next month's policy meeting. "That's because overall inflation has been – and always is – a monetary phenomenon. The problem is that the Fed thinks it can manage inflation just by targeting short-term rates. We think the Fed needs to focus less on hiking interest rates and more on keeping the growth in the money supply under consistent control."Traders overall remained on the lookout for Japanese intervention to prop up a struggling yen.
The Australian dollar briefly dropped to a 2-1/2-year low against the U.S. unit at US$0.6170, before recovering to trade 0.3% higher at US$0.6291 .
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