The dollar found pockets of support as Fed minutes near
The U.S. dollar found pockets of support in Asia on May 17. However, it struggled to record gains, as investors are heavily positioned for it to drop further. Remarkably, the U.S. Federal Reserve holds interest rates low, and U.S. trade and current account deficits rise.
Easing commodity prices and virus outbreaks in Singapore and Taiwan helped modest dollar gains of 0.2% versus the risk-sensitive Australian and New Zealand dollars in the early part of the Asia session.
The U.S. dollar also increased 0.1% against the euro and the yen. However, it remains close to testing major support levels.
A greenback recovery that followed higher-than-anticipated inflation data last week has also faded as traders figure the Fed will maintain rates low.
The American currency last traded at $1.2134 per euro and has support at $1.2179. It traded at $0.7758 per Australian dollar and $0.7228 per New Zealand dollar.
Fed minutes are due on May 19 and are the next market focus for clues on the Fed’s thinking.
According to Kim Mundy, a currency strategist at the Commonwealth Bank of Australia in Sydney, the minutes are likely to reiterate that policymakers consider the pick-up in inflation to be transitory.
He added that they don’t anticipate the Fed to consider tapering its asset purchases soon. Mundy also announced that the greenback is anticipated to continue its downtrend this week after last week’s CPI-inspired rise.
Singapore and Taiwan have both tightened curbs as infections boost
The U.S. dollar index stands at 90.389, above key support at 89.677 and 89.206.
The British pound was traded close to a two-and-a-half-month high on May 17, at $1.4085, as the UK reopens its economy after a four-month coronavirus lockdown.
In Asia some early leaders in taming the pandemic are now dealing with new outbreaks. Singapore and Taiwan have both tightened curbs as infections boost, and the Taiwan dollar slumped to a three-week low on Monday.
The dollar edged up 0.1% versus the Chinese yuan to trade at 6.4424 ahead of industrial output and retail sales figures due mid-morning on May 17.
In crypto markets, cryptocurrencies traded under pressure after another weekend bouncing around following tweets from Tesla CEO Elon Musk. The largest cryptocurrency in the world, Bitcoin, reached its lowest since February on Sunday after Musk hinted at Tesla possibly selling its holdings.
The dominant cryptocurrency was last traded 2% weaker at $45,302, while Ether declined by 4% and traded at $3,421.
