Investing.com – The U.S. dollar rose on Tuesday ahead of the start of the Federal Reserve’s latest policy meeting, while the Japanese yen fell after expected intervention.
At 04:40 ET (0840 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, was trading 0.3% higher at 105.780, suggesting gains of about 1.4% in April.
Fed meeting gets bigger
The dollar has been broadly in demand this month as a series of higher-than-expected US inflation figures led traders to abandon early US$0.000 rate cuts.
The US central bank will begin its final two-day meeting later in the session and is expected to keep interest rates at an elevated 5.25%-5.5% range when it ends its meeting on Wednesday.
Investors will be waiting for guidance on whether the Fed still plans to cut interest rates at some stage this year, initially expecting the first rate cut to come in March, then June and now September.
Euro struggles despite rising retail sales in Germany
Europe fell 0.2% to 1.0702, struggling to gain ground against a strong dollar even after data showed growth rose more than expected in March.
Retail sales rose 1.8% from the previous month, pointing to a recovery in consumption that bodes well for the eurozone’s largest economy, which just avoided recession.
Traders expect the latest data on inflation and growth for the eurozone as a whole to be released later in the session.
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Eurozone growth in April is tentatively expected to be 2.4% year-on-year, still slightly above the ECB’s medium-term target of 2.0%, while the region is expected to grow at just 0 .1% in the first quarter, growth will be only 0.2% year on year. basis.
The bank has indicated it is likely to cut its deposit rate in June, but there is still a large degree of uncertainty about how many more cuts, if any, it will see this year.
fell 0.2% to 1.2534, retreating as the dollar strengthened, with sterling set to fall about 0.7% this month.
Yen retreats after supposed intervention
In Asia, the index rose 0.4% to 156.88, with the yen falling slightly against the dollar after a sharp rise in the previous session that looked like government intervention.
The pair is still a long way from the 34-year high of 160.245 reached in the previous session.
Japanese officials have declined to confirm intervention to support the yen, but the country’s top currency diplomat Masato Kanda said on Tuesday that authorities were prepared to deal with currency issues around the clock.
Mixed Japanese data contributed to the yen’s weakness on Tuesday. Although the index rose more than expected in March, it fell well short of expectations, presenting a subdued outlook for consumer spending and inflation.
traded 0.1% higher at 7.2416 after mixed data on the Purchasing Managers’ Index pointed to some slowing in the Chinese economy.
Official data showed activity slowed slightly less than expected but rose substantially less than expected.
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fell 0.6% to 0.6527, with the Australian dollar hurt by significantly weaker-than-expected data.