FOREX-Dollar eases as inflation in focus, BOJ governor nomination awaited

The dollar treaded water on Tuesday as investors braced for an highly anticipated inflation report, while the yen strengthened ahead of the expected announcement of surprise pick Kazuo Ueda as the next Bank of Japan governor. Markets are looking to the U.S. consumer price index (CPI) data for further clues on Federal Reserve's policy outlook, with the headline number expected to rise 0.5% in January, according to a Reuters poll, after falling 0.1% in December. "There are tentative signs that U.S. inflation is cooling ... (but) there is a limit on how low underlying inflation can go while services inflation is still very high," said Kristina Clifton, a senior economist at Commonwealth Bank of Australia.

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