Shares dip, US dollar holds steady

Share markets have edged down and the dollar held onto overnight gains before US inflation data that will influence the Federal Reserve's rate plans.

The likely collapse of a major crypto exchange also rattled investors.

Europe's STOXX 600 index fell 0.4 per cent, and Asia's broadest index of shares outside Japan dipped by a similar amount, as traders were cautious of placing too many bets ahead of the data. US S&P500 futures inched up 0.2 per cent.

Sky-high inflation has caused the Fed to raise rates aggressively this year, a process that has boosted the dollar and caused US Treasuries and shares around the world to sell off sharply.

Hopes the Fed might be nearing the end of this process helped the STOXX benchmark to a two month high earlier this week, however.

The release of US CPI data, due at 1330 GMT, is the main event of the day for markets as investors try to position themselves based on when and at what level they think US interest rates will peak.

The report is expected to show a slowing in both the monthly and yearly core numbers for October to 0.5 per cent and 6.5 per cent, respectively, according to a Reuters poll.

"I think the story here is that there are many indications of inflation peaking and rolling over - such as supply chains, used cars, maybe wages - but they simply haven't shown in the CPI report, so the question is: is today the day that all these indicators finally show up?" said Samy Chaar, chief economist at Lombard Odier.

"Everyone is focused on that and how that will affect the pricing for not only the December Fed meeting but also the peak policy rate pricing."

He said if CPI came in higher than expected, particularly its core components then that pricing would go up, which would be a dollar bullish story, while a lower than expected print could cause the dollar to give back some gains.

Markets are currently pricing in a 54 per cent chance of a 50-basis-point increase at the Fed's December meeting, according to CME's Fedwatch tool, with still a good chance of a 75-basis-point rise. Expectations for future meetings are divided.

The US dollar was a fraction firmer on Thursday at $0.9986 per euro and 146.38 yen.

It hit a 32-year high of 151.94 yen in October and a 20-year peak against the euro in September when the European common currency dropped as low as $0.9528.

The benchmark 10 year US treasury yield was 4.1 per cent steady on the day, while European government bond yields were also largely flat.

The looming CPI data meant markets largely looked through the outcome of the US mid-term elections. Republicans were edging closer to securing a majority in the US House of Representatives while control of the Senate hung in the balance.

Another factor for markets is that China is again grappling with a COVID-19 surge, with the southern metropolis of Guangzhou reporting thousands of cases. Chinese blue-chips lost 0.7 per cent and the Hong Kong benchmark fell 1.7 per cent.

Apple Inc supplier and iPhone assembler Foxconn said on Thursday it expected flattish revenue in the fourth quarter, as the company grapples with COVID-19 curbs at a major factory in China's Zhengzhou industrial hub.

In the crypto world, bitcoin rose 5 per cent to $16,666 on Thursday, after plunging sharply for two straight sessions to as low as $15,632, its lowest level since late 2020.

Binance, the world's biggest crypto exchange, said late on Wednesday that it had decided not to acquire smaller rival FTX, which has grappled with a severe liquidity crunch and warned it faces bankruptcy without more capital.

In commodities, oil prices edged down on Thursday, after tumbling around 3 per cent in the previous session on fears of demand from China and rising US crude stocks.

US crude oil futures were 0.16 per cent lower at $85.63 per barrel, while Brent crude futures lost 0.37 per cent to 92.39.

Gold was steady with the spot price at $1,707.3 per ounce.