The U.S. dollar steadied ahead of FED minutes
The U.S. dollar steadied versus major currencies on May 19 as traders awaited U.S. Federal Reserve minutes. However, the dominant cryptocurrency, Bitcoin, declined after China banned its financial institutions from offering services related to cryptocurrency assets.
The minutes from the Fed’s most recent meeting due later on Wednesday are anticipated to confirm that policymakers consider a rate hike is still in the distance.
Investors will also be watching consumer price data in the United Kingdom and Canada later in the trading day. They are trying to determine how quickly leading economies may be forced to rein in their accommodative monetary policy, which holds the key to the greenback’s trend in the medium term.
According to Masafumi Yamamoto, chief currency strategist at Mizuho Securities, U.S. consumer prices are quite high. He added that if Britain and Canada remain below that level, it suggests the pace of normalization in America will be faster. Yamamoto added that dollar selling may not last much longer.
Furthermore, the American currency against the Canadian dollar stood at C$1.2076, near its weakest since May 2015. The British sterling bought $1.4187, which was close to its strongest level since late February. The euro traded at $1.2231. The greenback was little changed at 108.96 yen and 0.8974 Swiss franc.
Fed policymakers reiterated that they anticipate rates to remain low
Last week’s data revealed that U.S. consumer prices surged 4.2% in April from a year earlier was the quickest rise in more than a decade. It raised fears the Fed will have to begin raising interest rates sooner than anticipated.
Remarkably, Fed policymakers have announced the spike is temporary and reiterated that they anticipate rates to remain low.
The U.S. dollar index versus a basket of six major currencies traded at 89.732, close to the lowest since late February.
Expectations for policy tightening in Canada and the gradual lifting of COVID-19 restrictions in the UK have boosted both countries’ currencies.
Meanwhile, bitcoin fell below the closely-watched $40,000-mark to a three-month low of $39,000. Ether sank by over 13% to $2,900, a two-week low.