USD, JPY gain ahead of US inflation report

The dollar and yen gained against most major counterparts on prospects report today will show that U.S. inflation isn’t weak enough for the Fed to consider QE3. The EURCHF rose to 1.1518 and USDCHF rose to 0.7990 on speculation the SNB will expand efforts to curb the currency’s strength. The GBPUSD declined to 1.6495 before spending data that may add to evidence the U.K. economy is losing momentum. The AUDJPY declined to 80.25, NZDJPY down to 63.70 as Asian equities fell, damping demand for higher-yielding assets. Fed’s Plosser and Fisher, who dissented from the Fed’s latest policy statement, yesterday spoke out against unnecessary stimulus. Fisher also said monetary easing shouldn’t be used to boost stocks. Today’s Initial Jobless Claims will most probably show climb of 5,000 to 400,000.

The EURCHF rose amid concern SNB will expand efforts to weaken its currency to protect exporters and said yesterday it will boost liquidity to the money market. Swiss Finance Minister Widmer-Schlumpf said any decision on a target for the currency is up to the central bank. The GBPUSD ended a five-day rally before a report forecast to show U.K. retail sales rose in July at a slower pace where sales including fuel rose 0.3%. BOE policy makers Dale and Weale ended their push for an interest-rate increase this month, according to minutes of the Aug. 3-4 meeting published yesterday. The MPC voted unanimously to hold the key rate at a record-low 0.5% and Posen continued to vote for a 50-billion-pound ($83 billion) expansion of the BOE’s QE program. In other news, Japan’s exports fell more than expected 3.3% as a global slowdown and strengthening currency weigh on the outlook for Japan’s overseas sales.

UK retail sales, US jobless claims, leading indicators, existing home sales, and most importantly US inflation data form today’s calendar events. Also, Fed’s Dudley would be speaking today.