Dollar Holds Steady as CPI Data Looms Over Fed Path

The dollar was little changed in Asian trading Wednesday, with currency markets marking time ahead of the U.S. inflation print that could reset expectations for the Federal Reserve's next move.

The euro edged up to $1.0735. Sterling held near $1.2760. The yen remained under pressure at 161.50 per dollar, close to the 38-year low hit late last month, even after Japan's top currency official said officials were watching speculative moves with "a high sense of urgency."

Oil prices rose about 1%, with Brent crude climbing above $85 a barrel after a series of attacks on commercial vessels in the Red Sea raised supply concerns. The Houthi group said it had targeted a container ship and a tanker, disrupting traffic through a route that carries roughly 12% of global seaborne trade.

Cryptocurrencies edged lower. Bitcoin slipped to $57,800, down 1.2% on the session. Ether lost 1.5% to trade near $3,120.

All eyes are on the U.S. consumer price index due at 8:30 a.m. ET. Headline inflation is seen cooling to 3.1% from 3.3%. Core CPI is expected to hold at 3.4%, a level that would reinforce the Fed's cautious stance on rate cuts. A hotter print would likely push Treasury yields higher and strengthen the dollar, traders said. A soft number could revive bets on a September cut, weighing on the greenback.

"The market is priced for a benign number," said Chris Weston, head of research at Pepperstone in Melbourne. "If we get a downside surprise, the dollar could break lower quickly. An upside miss and we'll see the yen test new lows."

The yield on the benchmark 10-year Treasury note was flat at 4.38% ahead of the data.

For the yen, the risk is asymmetric. A dollar-positive CPI surprise would test the 161.80 area, a break of which could open a run toward 162.50, traders said. A dollar-negative surprise would relieve some pressure, with the pair likely to fall back toward 160.50.

Japan intervened in the currency market in late April and early May, spending a record 9.8 trillion yen ($60.8 billion) to support the currency. Finance Minister Shunichi Suzuki repeated the standard warning on Tuesday, saying authorities were ready to take "decisive steps" against excessive moves.

In commodities, gold edged up 0.3% to $2,331 an ounce, supported by the softer dollar. Copper slipped 0.4% on the London Metal Exchange, extending losses from the previous session.

The S&P 500 futures pointed to a flat open, with the index having closed at a fresh record on Tuesday. The Nasdaq 100 futures were also little changed.

Bitcoin's decline came as the Mt. Gox trustee said the bankrupt exchange's creditors would begin receiving repayments in bitcoin and bitcoin cash in early July, removing a supply overhang that has weighed on sentiment.