U.S. dollar moves in narrow range ahead of inflation report

The currency remained pinned in the narrow trading range it has sat in for the past week ahead of the release of PCE data for July later on Wednesday

The U.S. dollar was rangebound in early Asian trading on ​Wednesday as an uneasy calm hung over currency markets, with investors awaiting inflation report ahead of the Jackson Hole symposium this weekend.

The U.S. currency remained pinned in the narrow trading range it has sat in for the past week against most of its major peers ahead of the release of PCE data for July later on Wednesday.

Signs of Middle East de-escalation, including ​plans to return U.S. diplomatic staff to the region and efforts to reopen the Strait between Iran and Oman, ​weighed on oil prices and supported broader risk sentiment, Westpac analysts wrote in a note.

The U.S. dollar index snapped a three-day winning streak on Tuesday, ​and was holding steady at 98.918 in early Asian trading.

Oil prices slipped in the Asian day on Wednesday, with Brent crude down ​2.1% at $86.68, as Iran said it had restarted talks with neighbour Oman to manage the Strait of Hormuz and diplomatic negotiations between Tehran and Washington remained stalled.

The Australian dollar was up 0.1% at $0.7172 after the release of data showing the trimmed mean CPI inflation measure rose at an annualised rate ​of 3.6%.

The New Zealand dollar was down 0.2% at $0.5962 ahead of an interest rate decision from the Reserve Bank of New Zealand ​next Wednesday. The market overwhelmingly expects the central bank to hike interest rates by 25 basis points to 2.75%, according to LSEG data.

However, the ‌U.S. ⁠dollar weakened 0.1% against the Canadian dollar to C$1.38405 per dollar, retracing some of its gains against the Canadian currency over the past two days after Ottawa hit back on Tuesday with retaliatory tariffs on about $20 billion worth of U.S. annual imports and rolled out aid for businesses and workers, after trade talks with Washington collapsed last week.