Reuters reports China considering allowing yuan to weaken
Traders watch U.S. inflation for clues on pace of Fed rate cuts
Japanese inflation supports expectations of Dec BOJ rate hike
Canadian dollar at 412year low with BOC set to slash rates

LONDONTOKYO, Dec 11 Reuters The dollar gained against European peers on Wednesday ahead of a highly anticipated reading of U.S. inflation, also boosted by a Reuters report China was considering allowing a weaker currency next year which sent the yuan and other Asian currencies lower.

The euro was last down 0.1 at 1.0515, a day before a European Central Bank meeting, and the pound shed 0.2 to 1.2747 as traders awaited U.S. CPI data, which will be released at 1330 GMT.

Economists expect both headline and core consumer prices to have risen 0.3 in November from previous increases of 0.2 and 0.3, respectively.

Traders currently assign 85 odds to a quarterpoint rate cut by the Fed on Dec. 18, but a higher than expected print could possibly disrupt these expectations, and concern about this was supporting the dollar on Wednesday.

The market is thinking 39;what if that CPI report comes in strong?39; and then some of the Fed easing expectations could be priced out which would be dollar supportive, said Jane Foley head of FX strategy at Rabobank.

She said the dollar was also being affected by Reuters39; report that China39;s top leaders and policymakers are considering allowing the yuan to weaken in 2025 as they brace for higher…