Investing.com – The U.S. dollar traded quietly on Wednesday ahead of the release of minutes from the Federal Reserve’s latest meeting, while sterling rose as inflation fell less than expected in April.
At 04:55 ET (0855 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, was trading marginally higher at 104.600.
Dollar seeks direction ahead of Fed minutes
The dollar is struggling to move in any meaningful way as traders wait for the results of the latest Federal Reserve meeting to look for more signals about a likely move in U.S. interest rates by the end of the year.
Last week’s below-expected consumer inflation data raised hopes for a rate cut within a reasonable timeframe, but some Fed officials continue to urge policy caution.
The Fed governor on Tuesday said the latest economic data indicates the Fed’s contractionary policy is working as directed, while the Atlanta Fed Chairman said the central bank needs to be cautious before its first rate cut to keep spending and spending in check. make inflation jump. “
“We should get a little more clarity on the FOMC’s views in the minutes of the May meeting,” ING analysts said in a note. “While there should be evidence of growing concerns about deflation issues, Powell’s messages appear to reflect broad optimism about future price developments.”
The pound sterling rose after the release of UK inflation data
In Europe, the index rose 0.2% to 1.2733 after UK inflation fell less than expected in April, making a rate cut next month less likely.
Growth was 2.3% a year, down sharply from March’s 3.2% rise and the lowest level since July 2021, when it was 2.0%, according to the Office for National Statistics. But still above the forecast of 2.1%.
“While this does not materially change the Bank of England’s trajectory, it may prompt it to delay rate cuts for another month. Our base case remains the first rate cut in August,” ING said.
was trading 0.1% lower at 1.0849 as traders eye the start of a rate cut cycle next month.
“European Central Bank President Christine Lagarde sounded cautious and accommodative, as were most of her Governing Council members’ comments in yesterday’s speech,” ING said, adding that markets were pricing in 24 bps of easing. next month.
“We still think EUR/USD could return to 1.08 in the near term, but our Q3 forecast remains at 1.10 as the Fed moves into easing and the ECB broadly meets market expectations for a cut rates,” ING added.
Kiwi jumps amid RBNZ’s aggressive approach
In Asia, the rate soared 0.5% to 0.6118, with the New Zealand dollar rising sharply after the official cash rate remained steady as widely expected but also signaled delays in any potential interest rate cuts due to persistent inflation.
fell 0.2% to 156.43 after weak Japanese trade data – which was disappointing for April and came in better than expected – weighed on the yen.
Trades were trading marginally higher at 7.2394, remaining within sight of a six-month high as traders awaited more signals on Beijing’s stimulus measures and the Chinese economy.