* China Q3 GDP in line with market expectations
* Aussie near 2-week high
* Dollar falters after U.S. core CPI below expectations
(Updates prices, adds comments)
By Anirban Nag
LONDON, Oct 19 The dollar index was subdued on
Wednesday as Treasury yields ticked lower after U.S. consumer
prices suggested underlying inflation was moderating, prompting
investors to trim bets on an interest rate hike later this year.
The index was down 0.1 percent at 97.809, below
Monday's seven-month high of 98.169. Against the yen, it was
down 0.3 percent at 103.55 yen while the euro was
slightly higher at $1.0985
The dollar struggled to gain traction in the wake of U.S.
inflation data on Wednesday. The so-called core CPI, which
strips out food and energy costs, gained 0.1 percent last month
after climbing 0.3 percent in August. The year-on-year increase
in the core CPI slowed to 2.2 percent following a 2.3 percent
rise in August.
Fed fund futures <0#FF:> imply around a 65 percent
probability of the Federal Reserve raising interest rates by
December, down from 70 percent before the CPI data.
"The U.S. data has not been great and U.S. rates have eased
on the back of that. That has seen dollar/yen come under some
pressure, but we expect some decent buying around the 103-103.50
yen level," said Yujiro Goto, currency strategist at Nomura.
Goto added there was a slight upside risk to the common
currency before the European Central Bank's policy meeting on
Thursday. The central bank is widely expected to keep its policy
unchanged with any decisions on the future of its asset purchase
scheme expected to be deferred until December.
But some traders expect ECB chief Mario Draghi to clarify
his stance on recent talk that the ECB is considering tapering
its asset purchases.
The Australian dollar held on to recent gains after a
barrage of Chinese data. China's third-quarter gross domestic
product matched market forecasts, while September industrial
production came in below expectations.
Hirofumi Suzuki, an economist for Sumitomo Mitsui Banking
Corporation in Singapore said the data suggested Chinese
authorities still have solid control over the economy and that
the risks of a sharp deterioration are limited. That bodes well
for the Aussie dollar in the near term, he said.
The Australian dollar last traded at $0.7670,
slightly higher on the day. Earlier on Wednesday, it rose to
$0.7691 at one point, matching its high on Oct. 4.
The Aussie had gained support following comments from
Reserve Bank of Australia Governor Philip Lowe on Tuesday that
he was comfortable with the current exchange rate.
(Additional reporting by Masayuki Kitano; Editing by Hugh