Investing.com – The U.S. dollar rose on Wednesday, recovering from recent declines as several Fed officials were set to speak.
At 04:20 ET (0820 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, was trading 0.2% higher at 105.500, rising from about a month’s low last week.
Waiting for new Fed speeches
The dollar gained slightly late Tuesday after the head of the Minneapolis Federal Reserve Bank suggested that persistent inflation and a resilient economy could persuade the U.S. central bank to keep interest rates unchanged through the end of this year.
US interest rate movements continue to dominate market attention, and with no major US economic data expected this week, policymakers’ views take on added importance.
The Fed chairman all but ruled out further monetary tightening last week, but there is great uncertainty about when rate cuts will occur.
Investors have no shortage of Fed officials to look forward to on Wednesday, with the Boston Fed’s vice chairman, governor and president scheduled to speak.
Morgan Stanley now expects the Fed to begin cutting interest rates from September from its previous forecast for July, while continuing three 25 basis point rate cuts throughout the year.
“The reversal in key components points to disinflation ahead, but given the lack of progress in recent months, the FOMC will need a little more time to gain confidence and take the first step,” the bank said in a May 7 note.
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German economy ‘still struggling’
In Europe, shares traded 0.2% lower at 1.0736 after data showed they were down 0.4% month-on-month in March.
“The renewed contraction in industrial production in March after two months of growth is a reminder that the German economy is still struggling,” analysts at Capital Economics said.
This signaled a rate cut in June, but there remains great uncertainty about what will happen to monetary policy after that.
traded 0.3% lower at 1.2473 ahead of Thursday’s US Bank meeting.
The UK’s central bank is not expected to change interest rates this week, with speculation it could steer markets lower as early as next month – shortly after the ECB is expected to cut interest rates on June 6.
Yen falls despite talk of intervention
In Asia, the rate rose 0.4% to 155.35, with the yen weakening to return to a 34-year high of over 160 hit last week, even as government officials continued to warn of possible currency intervention. markets.
Bank of Japan Governor Kazuo Ueda said on Wednesday the central bank could take monetary policy action if the yen’s decline materially affects prices, while the country’s Finance Minister Shunichi Suzuki repeated a warning that authorities are prepared to respond to excessively volatile moves. on the foreign exchange market.
fell 0.4% to 0.6568, extending a sharp decline from the previous session after the rate was less hawkish than traders had expected.
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While the RBA kept interest rates steady and warned inflation would remain resilient in the coming months, it stopped short of threatening further rate hikes – a scenario that had been priced into the Australian dollar ahead of the meeting.