Dollar firms in Asia after US inflation rise

TOKYO- The dollar firmed in Asia on Thursday after an unexpected rise in US inflation, while the euro struggled to recover as speculation swirls about further European Central Bank easing measures.

In Tokyo morning trade, the dollar strengthened to 107.31 yen from 107.14 yen in New York late Wednesday.

The euro was mixed at $1.2636 and 135.61 yen, against $1.2643 and 135.46 yen.

The Labor Department said Wednesday that US consumer prices rose 0.1 percent in September, beating expectations for a 0.2 percent dip and easing worries about deflation. It also provides support for higher interest rates, which support the dollar.

The euro was unable to recover owing to rumours that the ECB could widen its asset-buying stimulus by including corporate bonds.

A news report on the issue Tuesday was followed Wednesday by a member of the ECB’s decision-making governing council saying several colleagues had mentioned the idea, but that it had yet to be seriously discussed.

A wider ECB monetary base would pump more euros into the system, denting demand for the unit and sending its value lower.

“Moves in forex have again been led by further euro-dollar weakness as the ECB ‘corporate bond buying’ story refuses to die,” National Australia Bank said in a note.

Credit Agricole said investors would be watching the release of purchasing managers indexes through the day, with expectations for weak readings that will hit appetite for higher-risk assets.

However, the first PMI release of the day from HSBC saw a slight uptick in Chinese activity. Readings from the eurozone and United States are due later in the day.