NEW YORK (CBSNewYork) – Following the US Independence Day holiday weekend, the dollar moved higher versus a basket of peer currencies on Tuesday as traders positioned themselves ahead of the release of the minutes from the crucial June meeting of the US Federal Reserve. When the minutes of the Fed’s June meeting are released on Wednesday, market players will be seeking for hints as to when the Fed will begin to taper its pandemic-induced bond-buying frenzy as the economy recovers.
“Investors are expecting a more hawkish tone from these minutes, which could provide some upside for the dollar,” said Edward Moya, a senior market analyst at OANDA.
The dollar index was up 0.261 percent at 92.488 at 10:45 a.m. Eastern time.
The move higher comes after the dollar fell from a three-month high after a mixed US jobs data at the end of last week.
According to data released on Tuesday, the services industry in the United States grew at a sluggish pace in June, possibly due to manpower and raw material shortages, causing incomplete work to build up.
In other news, the euro fell to a three-month low against the dollar as poor data tainted the currency’s appeal.
Investor sentiment in Germany, the euro zone’s largest economy, is still high, but it dropped drastically in July, according to the ZEW economic research institute, while orders for German-made goods fell to their lowest level since the first lockup in 2020 in May.
The statistics weighed on the euro, which fell 0.33 percent to US$1.1827 against the dollar. Last week, it hit a low of US$1.1807, the lowest since early April. Policymakers at the European Central Bank are debating a new strategy, with many now supporting the idea of allowing inflation to rise above 2% for a while after it remained below that level for the past decade.
After hitting a one-week high of US$1.3888, sterling was down 0.29 percent against the dollar at US$1.3807, with markets anticipating England being the first major country to publicly begin living with the coronavirus by eliminating COVID-related limits in two weeks.
The New Zealand currency fell 0.34 percent to US$0.7008, reversing gains gained earlier in the day, as traders speculated that a rate hike could come as soon as November, following a very positive survey of business conditions.
The Australian dollar fell 0.16 percent to US$0.75125, after rising as high as 1.2 percent, after the Reserve Bank of Australia reduced bond purchases and revised its rate outlook to leave a sliver of room for raises before 2024.
The RBA joins a tiny but rising group of central banks that are backing away from significant pandemic-era support.
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(John McCrank contributed reporting; Julien Ponthus contributed more reporting; Jacqueline Wong, Mark Heinrich, and William Maclean edited)/n
