Connect with us

Hi, what are you looking for?

Investing Ideas

U.S. dollar edges higher as market awaits Fed minutes

Economy12 minutes ago (Jul 07, 2021 11:00AM ET)

(C) Reuters. FILE PHOTO: An employee counts U.S. dollar bills at a money exchange in central Cairo, Egypt, March 20, 2019. REUTERS/Mohamed Abd El Ghany/File Photo

By John McCrank

NEW YORK (Reuters) -The dollar was slightly higher on Wednesday as traders held off on big bets ahead of the publication of the minutes of the latest U.S. Federal Reserve meeting, in which it adopted a more hawkish stance, for hints of when monetary policy might shift.

The dollar has been supported by the pace of the U.S. economic recovery, which has advanced more quickly than in places like Europe or Japan, helped by an early rollout of vaccinations to curb the COVID-19 pandemic, along with massive amounts of fiscal stimulus.

One of the main drivers of foreign exchange in the second half of the year will be the divergence of central banks that begin winding down that stimulus, based on solid economic fundamentals, and those that do not, said Win Thin, global head of currency strategy at Brown Brothers Harriman.

The dollar index, which measures the greenback against a basket of peer currencies, edged up 0.225% to 92.747, consolidating near its recent 3-month high, even as U.S. bond yields fell to their lowest levels since February.

“Which brings us back to anticipated U.S. economic performance and eventual withdrawal of stimulus by the Fed,” said Thin.

Minutes from the Fed’s June policy meeting, due later on Wednesday, could shed some light on the timetable for the tapering of its pandemic-induced bond-buying spree.

“Investors will want to learn more about the likely timing of any QE taper, and any evidence that the officials engaged in concrete discussions of the pace and timing of a potential stimulus reduction can be seen as a hawkish surprise,” Valentin Marinov, head of G10 FX research at Credit Agricole (OTC:CRARY), said.

“Secondly, the FX investors will focus on any discussions of an even earlier rate lift-off, with the rates markets already attaching close to 90% probability to three Fed rate hikes in the next two years,” Marinov added.

The euro touched a three-month low against the dollar on Wednesday after German data raised doubts about the strength of the economic recovery.

The European single currency changed hands at $1.1800, having earlier touched a three-month low of $1.1798. Against the yen, it fell to 130.66 yen, edging near its two-month low of 130.05 set on June 21.

Investor sentiment in Germany, the euro zone’s biggest economy, fell sharply in July, though it remained at a very high level, the ZEW economic research institute reported.

Separate data showed orders for German-made goods posted their sharpest slump in May since the first lockdown in 2020, hurt by weaker demand from countries outside the euro zone.

Other risk-sensitive currencies took a hit after oil prices plunged as OPEC producers cancelled a meeting when major players were unable to come to an agreement to increase supply. [O/R]

The Australian dollar dipped 0.07% to $0.7489, stabilizing after a bounce on Tuesday when the Reserve Bank of Australia took a first step towards stimulus tapering.

The RBA announced a third round of its quantitative easing program, albeit at a smaller size than the previous two rounds, while retaining the April 2024 bond for its three-year yield target of 0.1%.

The Japanese yen traded little changed at 110.745 yen per dollar, still holding on to gains from its 15-month low of 111.64 touched last week.

In cryptocurrencies, bitcoin was 1.7% higher at $34,826.88 and ether was up 3.1% at $2,381.41.

U.S. dollar edges higher as market awaits Fed minutes

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

You May Also Like

Stock

Stock Markets25 minutes ago (Jul 16, 2021 05:46PM ET) (C) Reuters. FILE PHOTO: Johnson & Johnson’s Neutrogena Cool Dry Sport sunscreen, which is part...

Tech

Builders, creators and developers, this one’s for you! TechCrunch has always been about discovering fresh solutions and shining the light on exciting, new products...

Disclaimer: Wisegazette.com it's managers and its employees (collectively "The Company") do not make any guarantee or warranty about what is advertised or above. Information provided by this website is for research purposes only and should not be considered as personalized financial or health advice. Copyright © 2021 Wise Gazette. All Rights Reserved