Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Dollar edges up against yen as investors wait on inflation data, Fed

Published 07/06/2023, 11:30 am
Updated 08/06/2023, 05:38 am
© Reuters. FILE PHOTO: U.S. dollar banknotes are seen in this illustration taken March 10, 2023. REUTERS/Dado Ruvic/Illustration

© Reuters. FILE PHOTO: U.S. dollar banknotes are seen in this illustration taken March 10, 2023. REUTERS/Dado Ruvic/Illustration

By Karen Brettell

NEW YORK (Reuters) - The dollar edged higher against the yen on Wednesday as investors awaited U.S. inflation data for May and the Fed’s interest rate decision next week, while the Canadian dollar jumped after the Bank of Canada hiked rates.

The U.S. central bank is expected to hold rates steady next Wednesday as it evaluates the impact of recent rate increases, though Fed fund futures traders are pricing for an additional rate hike in July.

Consumer inflation data on Tuesday is expected to show that prices rose by 0.30% in May.

"We expect a fair degree of consolidation ahead of the Fed decision next week," said Bipan Rai, North American head of FX strategy at CIBC Capital Markets in Toronto. "That CPI number’s going to be critical for the Fed decision as well. To me it makes sense that we don’t see large bets placed either way at this point."

The dollar gained 0.31% to 140.10 yen, while the euro rose 0.11% against the U.S. currency to $1.0703. The dollar index was little changed on the day at 104.07.

Data on Wednesday showed that the U.S. trade deficit widened by the most in eight years in April as imports of goods rebounded while exports of energy products declined.

Traders have also priced out most expectations that the Fed will cut rates this year as inflation remains above target.

"There is persistence and resilience in inflation in the U.S., but also in much of the G10, as well, meaning that central banks are likely to be cautious," said Rabobank chief strategist Jane Foley.

The Canadian dollar strengthened after the Bank of Canada hiked its overnight benchmark rate to 4.75%, the highest level in 22 years.

The U.S. dollar was last down 0.23% against the loonie at C$1.3371.

Although the rate hikes by foreign central banks could put pressure on the greenback, the prospect of an additional Fed rate increase in July is likely to limit losses.

The Fed next week may indicate that it is not done raising rates, and "that might short circuit the idea of the dollar getting hit because the Fed is going to be out of step with Canada, Australia and probably the ECB during this month’s meeting, because they’ll still have the idea that there’s more to come," said Lou Brien, market strategist at DRW Trading in Chicago.

The Australian dollar turned negative a day after the Reserve Bank of Australia raised rates by a quarter-point to an 11-year high of 4.1%.

Australia's central bank chief on Wednesday stepped up a warning of more rate hikes ahead to temper rising price pressures.

The Australian currency was last down 0.25% at $0.6657, after earlier reaching $0.6718, the highest since May 11.

The offshore Chinese yuan reached its weakest level against the U.S. dollar since Nov. 30 after data earlier on Wednesday showed that China's exports shrank much faster than expected in May and imports fell as manufacturers struggled to find demand abroad and domestic consumption remained sluggish.

The yuan was last at 7.1465 against the greenback.

========================================================

Currency bid prices at 3:05PM (1905 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Dollar index 104.0700 104.0800 +0.01% 0.560% +104.2900 +103.6400

Euro/Dollar $1.0703 $1.0693 +0.11% -0.10% +$1.0740 +$1.0669

Dollar/Yen 140.1000 139.6450 +0.31% +6.84% +140.2250 +139.0250

Euro/Yen 149.96 149.29 +0.45% +6.89% +149.9900 +148.6400

Dollar/Swiss 0.9097 0.9077 +0.24% -1.60% +0.9100 +0.9044

Sterling/Dollar $1.2440 $1.2423 +0.16% +2.88% +$1.2500 +$1.2395

Dollar/Canadian 1.3371 1.3402 -0.23% -1.31% +1.3426 +1.3321

Aussie/Dollar $0.6657 $0.6672 -0.25% -2.37% +$0.6717 +$0.6643

Euro/Swiss 0.9736 0.9703 +0.34% -1.61% +0.9737 +0.9691

Euro/Sterling 0.8601 0.8604 -0.03% -2.75% +0.8612 +0.8585

NZ $0.6041 $0.6079 -0.58% -4.81% +$0.6097 +$0.6031

Dollar/Dollar

Dollar/Norway 11.0330 11.0960 -0.52% +12.47% +11.1330 +10.9880

Euro/Norway 11.8122 11.8554 -0.36% +12.56% +11.8950 +11.7859

© Reuters. FILE PHOTO: U.S. dollar banknotes are seen in this illustration taken March 10, 2023. REUTERS/Dado Ruvic/Illustration

Dollar/Sweden 10.8937 10.9181 +0.01% +4.67% +10.9448 +10.8178

Euro/Sweden 11.6601 11.6586 +0.01% +4.58% +11.6985 +11.6138

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.