* Australian dollar jumps as inflation pares rate-cut risk
* UK jobs data, BoE minutes awaited for clearer rats signal
* Yen briefly blips higher after BOJ stands pat as expected
* Bank of Canada meets after rough month for Canadian dollar
By Patrick Graham
LONDON, Jan 22 The Australian dollar stole the
spotlight on Wednesday, rallying against its U.S. counterpart
after an unexpected spike in inflation led investors to cut back
bets on another interest rate cut.
In Europe, the focus was on a heavy day of British data and
central bank minutes, which may offer the Bank of England a
chance to tweak its message on monetary policy and cool
expectations for a early rise in its rates next year.
The yen hit a session high after the Bank of Japan kept
monetary policy steady as most in markets had expected, but
disappointed those hoping for additional easing measures before
a scheduled sales tax hike in April.
The Australian and Canadian dollars are seen weakening in
2014 despite an improving global economy, with their prospects
likely to be tied more closely to shifts in monetary policy at
home than demand for their commodity exports.
But the largest quarterly rise in inflation in over two
years and an annual underlying rate of 2.6 percent helped the
Aussie gain almost 1 percent, all but erasing its losses since
the start of January.
"The market had been pricing in a 30-40 percent change of
more cuts in rates and that has really been ruled out," said
Michael Sneyd, strategist with BNP Paribas in London. "There may
even now be scope for the market to think about the RBA hiking
Most of the action in major currencies this year has come
from outside the big three of the dollar, yen and euro in the
absence of much new direction on monetary policy by their
respective central banks.
The BOJ clung to its upbeat consumer inflation forecasts on
Wednesday, encouraged by signs of a broadening recovery that may
nudge firms into spending more on wages and investment.
The dollar rose just over 0.1 percent on the day to 104.44
yen. It hit a one-week high of 104.75 yen but in general
has struggled to make progress after bouncing off a longer-term
high of 105.40 earlier this month.
"There is expectation, leading up to the increase in the
consumption tax, that the BOJ is going to take more expansionary
measures, so whether it was January or February or March, the
general consensus is that something will be done in that
period," said Bart Wakabayashi, head of forex at State Street
Sterling, the fastest-rising major currency in the past six
months, hovered near one-year highs against the euro before the
release of minutes from the Bank of England's last policy
An improving economy and expectations the BoE will be the
first major central bank to raise rates have also driven the
pound close to its highest against the dollar since 2011.
Many strategists are unsure sterling can go much higher
against the dollar this year, although there is the prospect
before April of flows from Vodafone's $130 billion sale
of its stake in Verizon's U.S. wireless business.
Data on the labour market, whose improvement has prompted
speculation the bank may wind up raising rates earlier than it
has flagged, are due at the same time as the minutes, 0930 GMT.
Sterling was flat against the euro and 0.14 percent lower
against the dollar at $1.6454.