The dollar held firm on Wednesday after a surprisingly high reading for U.S. inflation raised expectations that Federal Reserve Chair Janet Yellen could strike a more hawkish tone on the monetary policy outlook, Reuters reported. The risk of a faster U.S. policy tightening was high enough to keep European stocks on the defensive, following earlier falls in many Asian markets. Euro zone bonds sold off slightly. Sterling traded near its recent five-year peak of just over $1.70 before the Bank of England releases the minutes of its last policy meeting. The U.S. and British central banks' outlooks diverge from that of the European Central Bank, which cut all its interest rates earlier this month, while promising banks more liquidity. The dollar index last stood at 80.613, having climbed 0.2 percent on Tuesday. Against the yen, the greenback reached a one-week high of 102.31, while the euro retreated from a one-week peak hit on Tuesday to trade flat at $1.3550. U.S. consumer prices recorded their fastest rise in more than a year and it may give the Fed a reason to signal it could bring forward the date when it might consider hiking rates. The FTSEurofirst 300 index of top European shares was up 0.2 percent at 1391.10.
