Breaking News
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Dollar Down but Near One-Month High Ahead of Fed Policy Decision

ForexJun 16, 2021 06:22
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters.

By Gina Lee – The dollar was down on Wednesday morning in Asia but remained near a one month high ahead of a highly anticipated U.S. Federal Reserve policy decision.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched down 0.04% to 90.468 by 13:11 AM ET (5:11 AM GMT).

The USD/JPY pair was steady at 110.06. The yen remained near a two-month low against the dollar touched earlier the month, with investors awaiting a Bank of Japan policy decision on Friday.

Japanese trade data for May disappointed, with exports growing 49.6% year-on-year and the trade balance contracting to JPY187.1 billion. However, imports grew a better-than-expected 27.9% year-on-year.

The AUD/USD pair edged up 0.15% to 0.7696 and the NZD/USD pair was up 0.32% to 0.7142.

The USD/CNY pair inched down 0.07% to 6.4008. Chinese economic data, including industrial production and the unemployment rate, is due later in the day.

The GBP/USD pair inched up. 0.06% to 1.4089. The pound hit a one-month low of $1.4035 during the previous session despite the release of better-than-expected employment data, including April's average earnings index and bonus.

However, the rapid spread of the highly contagious Delta variant of COVID-19 that forced U.K. Prime Minister Boris Johnson to delay his plans to lift lockdown measures by three weeks, remains a big risk.

U.S. economic data released on Thursday said core retail sales contracted a larger-than-expected 0.7% month-on-month in May. The producer price index growing a better-than-expected 0.8% month-on-month and 6.6% year-on-year respectively in May.

Meanwhile, industrial production for May grew a better-than-expected 0.8% month-on-month but slowing down slightly to a 16.37% growth year-on-year.

The Fed is widely expected to acknowledge the first conversations about when and how fast to begin asset tempering when it hands down its policy decision later in the day.

Some investors insisted the Fed would refrain from any hints of a start in assert tempering anytime soon.

"The Fed has said they're going to be reactionary to the data... and they’ve said they want to see extended inflationary conditions before they make any commitment to tapering or hikes," State Street (NYSE:STT) Bank Tokyo branch manager Bart Wakabayashi told Reuters.

However, the dollar could rally at any hint that the Fed will bring asset tapering forward or start discussing rate hikes sooner than expected. "I think they’ll stick to the same tagline, and it will probably end up being a non-event,” Wakabayashi added.

Other investors added that the dollar could rise by default as other major currencies seemed to be losing momentum.

"We have to note that the dollar is strengthening now even as U.S. debt yield has dropped below 1.5%… today's currency market suggests there is strong potential pressure to lift the dollar, should there be some sort of surprises from the Fed," SMBC Nikko Securities chief FX strategist Makoto Noji told Reuters.

Dollar Down but Near One-Month High Ahead of Fed Policy Decision

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email