Investors anticipated minutes from the most recent Federal Reserve meeting in the United States. Hence, the dollar rose in Asia on Wednesday morning.
The US Dollar Index measures the greenback against a basket of other currencies. By 1:07 p.m. ET it had risen 0.09 percent to 101.968. The USD/JPY exchange rate increased by 0.11 percent to 126.96. The Australian dollar rose 0.15 percent to 0.7114; meanwhile, the New Zealand dollar rose 0.67 percent to 0.6507. As predicted by Investing.com, the Reserve Bank of New Zealand raised the interest rate from 1.5 percent to 2.0 percent. It also gave more hawkish guidance on its future policy course, stating that raising interest rates sooner rather than later may lessen the danger of persistently rising inflation. The USD/CNY exchange rate rose 0.26 percent to 6.6708; meanwhile, the GBP/USD exchange rate rose 0.05 percent to 1.2535.
Predictions on Euro Movements
The euro fell 0.22 percent to $1.07105, but it stayed close to Tuesday’s high of $1.0748, the highest level since April 25. President of the European Central Bank, Christine Lagarde, stated that eurozone interest rates would most likely be positive by the end of the third quarter, boosting the euro. Lagarde’s remarks imply a deposit rate hike of at least 50 basis points, sparking expectations of larger hikes this summer. After falling to a nearly one-month low of 2.718 percent overnight, the 10-year Treasury yield rose to 2.7631 percent. Investors watch the monetary policy outlook for signs of a possible recession brought on by tighter monetary measures.
Investors will be looking for additional signals on whether the Fed’s tightening will continue after the minutes from the most recent meeting, later today. In a note, National Australia Bank markets economist Tapas Strickland wrote, “It is uncertain if we are getting closer to the Fed put, but it is obvious that growth headwinds are becoming more visible”. “Of course, the Fed is still focused on inflation, but if inflation readings begin to decline, Bostic has opened the door to a Fed pause.”