Dollar slips on inventory losses and reduces bond yields

NEW YORK (Reuters) – The dollar has fallen to its lowest level in two weeks on Thursday against a basket of currencies as traders have reduced their holdings in US dollars due to lower US Treasury yields and further losses on Wall Street.

A weaker-than-expected rise in consumer prices in the US in September also reduced bets on a faster rate hike by the Federal Reserve, further weakening the dollar's attractiveness.

The euro has reached a one-week high against the dollar, the minutes of last month's meeting of the European Central Bank suggesting that politicians not abandon their plans to put an end to the purchase program. EUR 2.6 trillion bonds from the ECB this year.

The Swedish krona jumped after stronger than expected inflation and house prices, allowing the Riksbank to raise interest rates in December, analysts said.

The Chinese yuan has progressed in offshore transactions, rebounding after an initial weakness due to a defeat in global equities. Traders have wiped out the words of US President Donald Trump, signaling that he was not backing in the face of escalating trade war with Beijing.

"Returns have fallen and inflation data are lower. That begs a question about the number of Fed rate hikes in 2019, "said Minh Trang, a leading foreign exchange trader at Silicon Valley Bank in Santa Clara, California.

The US Department of Labor announced Thursday that its consumer price index had risen 0.1% in September, which is lower than the 0.2% increase forecast by analysts polled by Reuters.

CPI lacks reduced stakes US inflation is picking up, spurring the appetite for US government bonds. This added to the safe-haven stock of Treasury securities resulting from a massive sell-off in foreign stock markets that followed the significant losses recorded by the S & P 500 and Dow Jones indices on Wednesday.

An index that tracks the dollar against six currencies fell to 94.987, the lowest level since September 28th. At 10:50 (1450 GMT), the dollar index was down 0.28% to 95.242.

The benchmark 10-year US Treasury yield fell to its lowest level in a week at 3.1649 percent. It hit a seven-year high of 3.261 percent on Tuesday.

Fed officials' forecasts released last month indicated expectations of three rate hikes in 2019, and some people said they were open to a rate hike in December, which would be the fourth of this year.

In their last minutes, their counterparts in the ECB seemed poised to normalize their ultra-soft policy this year, despite concerns about slowing growth in Europe.

The euro zone's common currency rose 0.41% to 1.15655 USD after peaking a week. It was 0.42 percent higher at 129,840 yen.

The Swedish krona was 1.35% higher at 9.0075 for a dollar and 0.92% higher at 10.4279 for one euro.

The offshore yuan rose 0.42 percent to 6.8944 per dollar, bouncing off an eight-week low on Thursday.