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FOREX-Dollar extends gains, inflation data in focus

Kitco News

* Sterling retreats from 1-year high on wage data miss

* Focus on U.S. consumer inflation data due Thurs

* Graphic: World FX rates in 2017 (Updates prices, market activity and comments to U.S. afternoon trading)

By Saqib Iqbal Ahmed

NEW YORK, Sept 13 (Reuters) - The dollar rose on Wednesday after a report showed U.S. producer prices rebounded in August and as traders positioned themselves ahead of consumer inflation data due on Thursday that will be closely watched by the U.S. Federal Reserve as it considers when to next raise interest rates.

The dollar index , which tracks the currency against a basket of six major rivals, was up 0.6 percent at 92.435, after rising to 92.53, its highest in more than a week.

The index, which fell to its lowest since January 2015 last week, on worries linked to Hurricane Irma and North Korea, has climbed this week as risk sentiment improved.

The index added to this week's gains on Wednesday after the U.S. Labor Department said its producer price index for final demand increased 0.2 percent in August after slipping 0.1 percent in July. While domestic producer prices rose less than forecast, "the rebound does suggest that the U.S. economy retains underlying momentum," said Karl Schamotta, director of global market strategy at Cambridge Global Payments in Toronto.

"The overall demand picture is quite strong and prices are beginning to respond to an increase in demand in the real economy," he said.

The greenback advanced against the euro , with the single currency falling 0.68 percent to $1.1884. The euro's decline accelerated after it slipped below $1.1950, a key technical level.

"That just cascaded the effect of the move that we have seen since the start of the week," said Mazen Issa, senior currency strategist at TD Securities in New York.

Issa also attributed some of the greenback's gains to traders' expectation for strong consumer inflation data on Thursday.

"I do think some part of it has been some front-loaded expectations before U.S. CPI tomorrow," he said.

Inflation is being closely watched for clues on the timing of the next interest rate increase. The Fed meets next week but is not expected to raise rates.

Economists polled by Reuters expect Thursday's data to show consumer prices rose 0.3 percent in August and 0.2 percent excluding food and energy.

Meanwhile, sterling fell after posting its biggest daily gain in more than two months the previous day as investors took profits before a central bank meeting on Thursday that will have to grapple with divergent data in recent days. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Yields and currencies ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Saqib Iqbal Ahmed; Editing by Andrea Ricci and Jonathan Oatis)

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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