Asian session: The dollar declined

01:00 Australia Consumer Inflation Expectation August +2.6% +2.3%

The dollar declined versus most of its 16 major peers after a U.S. central bank official cautioned against excessive optimism over the economy.

The Bloomberg U.S. Dollar Index fell after Federal Reserve Bank of St. Louis President James Bullard said yesterday policy makers should be careful in changing course based solely on their economic forecasts. Federal Open Market Committee forecasts “have tended to be too optimistic over the last several years,” Bullard said in a speech in Paducah, Kentucky. “Given this experience, I think caution is warranted in taking policy action based on forecasts alone.”

Economists predict a report today will show gains in U.S. consumer prices slowed last month. The Labor Department may say today inflation in the world’s biggest economy, as measured by consumer prices, probably climbed 0.2 percent in July after a 0.5 percent gain a month earlier, a separate Bloomberg News poll showed.

The yen gained as Japanese stocks slid after a government official said Prime Minister Shinzo Abe hasn’t given instructions to lower the nation’s corporate tax. Japan’s Chief Cabinet Secretary Yoshihide Suga said today Abe hasn’t given instructions to lower the corporate tax. The Nikkei newspaper reported on Aug. 13 that the prime minister has called for a study to reduce the levy.

EUR / USD: during the Asian session the pair rose to $ 1.3310

GBP / USD: during the Asian session the pair rose to $ 1.5540

USD / JPY: during the Asian session the pair fell to Y97.55

The UK calendar sees the release of the July retail sales data at 0830GMT. Private sector surveys point to strong retail sales growth in July, with the aggressive summer discounting on footwear and clothing set to have boosted volumes. The near month-long heatwave is also seen boosting sales. Analysts are looking for a total month on month increase of 0.9% and an annualised rise of 2.8%.