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FOREX-Dollar edges up ahead of Fed minutes; Turkish lira tumbles

Published 23/05/2018, 01:59 pm
© Reuters.  FOREX-Dollar edges up ahead of Fed minutes; Turkish lira tumbles
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* Dollar firmer vs basket of currencies

* Near-term focus on Fed minutes due Wednesday

* Turkish lira slides to fresh record low

* Talk of stop-loss TRY selling by Japan retail traders

(Updates prices)

By Masayuki Kitano

SINGAPORE, May 23 (Reuters) - The dollar edged higher versus a basket of currencies on Wednesday, with investors awaiting the minutes of the Federal Reserve's last policy meeting for hints on the pace of further U.S. monetary tightening.

The dollar index .DXY , which measures the currency against a basket of six major peers, rose 0.1 percent to 93.681. On Monday, the index set a five-month high of 94.058.

The increase marked a gain of more than 5 percent from mid-April and was driven by generally upbeat U.S. economic data and expectations the Fed would raise interest rates at least two more times this year.

The yen gained broadly on Wednesday, as investors sought safer assets amid economic concerns after U.S. President Donald Trump tempered optimism over progress made so far in trade talks between the world's two largest economies. Trump said on Tuesday he was not pleased with recent trade talks between the United States and China. weighing on the prices of riskier assets, Trump also said there was a "substantial chance" his summit with North Korean leader Kim Jong Un will not take place as planned on June 12 amid concerns that Kim is resisting giving up his nuclear weapons. the yen, the dollar fell 0.3 percent to 110.53 yen JPY= , pulling away from a four-month high of 111.395 yen set on Monday.

The safe-haven yen also rose against other currency crosses and surged against the Turkish lira, amid talk of Japanese retail investors selling the lira as stop-loss levels were hit.

The yen tends to rise in times of market turbulence since Japan is the world's largest creditor nation and traders tend to assume Japanese investors would repatriate funds at times of crisis.

Investors are now looking to the release on Wednesday of the Fed's minutes from its most recent meeting, when it kept interest rates steady.

In its post-meeting statement issued in early May, the Fed also said inflation had "moved close" to its target and that "on a 12-month basis is expected to run near the Committee's symmetric 2 percent objective over the medium term." hope to have a bit more clarity on the inflation outlook from the Fed. The second dimension is basically how tolerant the Fed (policymakers) are of a possible inflation overshoot above 2 percent," said Heng Koon How, head of markets strategy for UOB in Singapore.

The euro EUR= fell 0.1 percent to $1.1762, edging back in the direction of a six-month low of $1.1717 set on Monday.

In emerging markets, the Turkish lira TRYTOM=D3 also sold off more after rating agencies sounded the alarm on Tuesday about plans by President Tayyip Erdogan to tighten his grip on monetary policy. lira tumbled to a record low of 4.8450 per U.S. dollar in early Asian trade on Wednesday.

After paring some losses, the lira stood at 4.7700 per dollar, still down roughly 2 percent on the day.

Against the yen, the lira TRYJPY=R tumbled 2.3 percent to 23.1873 yen.

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