Dollar rebounds after five days of falls
The dollar rebounded on Wednesday after falling for five days in a row against its currency basket, as investors eyed a speech by the head of the Federal Reserve later in the day and U.S. inflation data for clues on the path of interest rates.
After a volatile Tuesday on which sterling rose more than 3 percent for its best showing against the dollar since at least 1998 GBP=D4, currency markets were calmer on Wednesday, with most of the previous day's moves seeing slight reversals.
Sterling retreated 0.7 percent. The dollar, which hit a seven-week low of 112.57 yen in early trade in Asia, climbed half a percent to 113.19 yen JPY=.
The dollar index .DXY, which measures it against a basket of six major peers, stood at 100.56, up 0.2 percent, after falling to 100.26 on Tuesday, its lowest since Dec. 8.
"Everything is just a partial reversal of the price action yesterday," said RBC Capital Markets currency strategist Adam Cole. He said the dollar's recent weakness had been primarily driven by positioning, which had built up heavily in favor of further dollar gains and was therefore vulnerable to exaggerated falls on negative news.
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