U.S. dollar advances as investors look to inflation data this week By

By Gertrude Chavez-Dreyfuss

NEW YORK (Reuters) -The U.S. dollar rose for a fourth straight session on Monday as investors looked to inflation data later this week that is likely to show that price pressures remain elevated in the world’s largest economy, keeping the Federal Reserve’s aggressive monetary policy on track to continue until next year.

Sterling, on the other hand, fell for a fourth straight trading day even after the Bank of England (BoE) expanded its support for financial markets.

U.S. data due on Thursday is forecast to show that headline inflation came in at a hot 8.1% year-on-year rate in September, but down from 8.3% in August. Core inflation is expected to have risen to 6.5% from 6.3% previously.

Chicago Fed President Charles Evans on Monday said inflation is much more persistent than the U.S. central bank initially thought. But he noted that the Fed may still be able to lower inflation without a sharp rise in unemployment and without pushing the economy into a recession.

The was last up 0.3% at 113.14, off the lows of around 110 last week and creeping back toward last month’s 20-year high of 114.78. The euro was down 0.4% at $0.9705.

U.S. data last Friday showed that unemployment unexpectedly fell and the economy added more jobs than predicted in September. That pushed up bond yields as traders increased their bets the Fed would hike interest rates by 75 basis points in November for the fourth meeting running.

“By illustrating continued strength in the labor market, Friday’s non-farm payrolls report gave the Fed carte blanche to continue raising rates,” said Karl Schamotta, chief market strategist, at Corpay in Toronto.

He added that the minutes from the Fed’s last meeting, due on Wednesday, “are likely to show policymakers remain willing to inflict serious economic pain on the U.S. and global economies as they try to bring down inflation.”

In Britain, the Bank of England attempted to ease concerns about the end of its emergency bond-buying scheme.

UK markets went into a tailspin in late September after the government unveiled a plan to slash taxes and ramp up borrowing. The pound tumbled and the BoE was forced to intervene to prop up bond markets.

The BoE said it was prepared to buy as much as 10 billion pounds ($11.07 billion) of gilts on Monday, double the previous limit. It also created a new program to help banks more easily access cash.

Sterling slipped for a fourth session running despite the BoE’s move. It was last down 0.2% at $1.1054, although it remained well above the Sept. 26 record low of $1.0327.

Geopolitical tensions and higher oil prices also caused renewed nervousness about growth, pushing investors back toward the dollar.

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