Dollar mostly lower but rises versus yen

The dollar traded mostly a bit lower on Thursday as weak US inflation data cooled expectations of a Federal Reserve interest rate hike next week. 

US import prices fell 1.8 per cent in August, their steepest drop since January, the Labour Department said in a report that could help dissuade the Fed from raising zero-level interest rates at its coming policy meeting, analysts said.

"The US economy showed its Achilles' heel in another subpar reading of inflation, news that weighed on the dollar and dampened expectations the Fed would raise rates next week," said Joe Manimbo of Western Union Business Solutions.

Mr Manimbo said that all eyes would be on Friday's US wholesale inflation and consumer sentiment data. "Lackluster news could see the dollar favor its back foot heading into next week's crucial Fed meeting," he added.