TOKYO: The dollar continued to hover near a five-month low versus major peers on Thursday as investors looked to key U.S. inflation data and a European Central Bank meeting later in the day to potentially set the direction for currency markets.
Investors have adopted a wait-and-see attitude all week, sucking volatility from the market and leaving major currencies mostly range-bound.
The dollar index has fluctuated narrowly around the psychologically important 90 level, and was last at 90.137.
The euro rose to a one-week high at US$1.2218 on Wednesday only to finish little changed, and was essentially flat at US$1.2178 in Asia.
The yen traded at 109.62 per dollar, also little changed from Wednesday and near the middle of the 109.19-110.325 range of the past two weeks.
Deutsche Bank’s Currency Volatility Index languished at its lowest level since February 2020.
The U.S. Labor Department’s consumer prices data has been much anticipated after last month’s report showed consumer prices increased by the most in nearly 12 years in April.
That has stoked bets that higher prices could last longer than some anticipate, potentially calling into question the Federal Reserve’s insistence that current inflation pressures are transitory and monetary stimulus should stay in place for some time yet.
Economists polled by Reuters estimated the CPI advanced 0.4per cent in May.
While the greenback has kept to tight ranges in the run-up to the report, benchmark 10-year Treasury yields – which helped drive the dollar index to a multi-year high earlier this year – has taken a sizeable step lower in the past week and was at 1.4874per cent in Asia from as high as 1.6350per cent on Friday.
“It feels like the balance of risk is tilted to the upside on U.S. CPI versus the consensus, which would favour a sell-off in Treasuries – (and thus) higher yields – and subsequently a stronger USD,” Chris Weston, head of research at brokerage Pepperstone in Melbourne, wrote in a note to clients.
“Bonds seem overbought.”
With the ECB, investors will be watching for any clues of an imminent slowdown to its bond-buying program.
While the ECB is widely expected to keep policy settings steady, the euro could be sensitive to changes in the bank’s economic forecasts or any signal that the pace of bond buying could be reduced in months ahead.
In crypto markets, bitcoin held gains from its biggest rally in four months on Wednesday, when it jumped nearly 12per cent. It last traded little changed at US$37,097.02, after rebounding from a three-week low of US$31,025 hit on Tuesday when signs of institutional investor caution and regulatory attention drove selling.
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Currency bid prices at 0049 GMT
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar
US$1.2175 US$1.2179 -0.02per cent -0.34per cent +1.2181 +1.2176
Dollar/Yen
109.5900 109.6450 -0.03per cent +6.12per cent +109.6750 +109.6150
Euro/Yen
133.43 133.53 -0.07per cent +5.13per cent +133.5500 +133.4300
Dollar/Swiss
0.8961 0.8960 +0.01per cent +1.28per cent +0.8962 +0.8958
Sterling/Dollar
1.4111 1.4114 +0.00per cent +3.30per cent +1.4115 +1.4110
Dollar/Canadian
1.2119 1.2110 +0.09per cent -4.82per cent +1.2119 +1.2108
Aussie/Dollar
0.7724 0.7731 -0.08per cent +0.42per cent +0.7731 +0.7724
NZ
Dollar/Dollar 0.7168 0.7178 -0.13per cent -0.18per cent +0.7178 +0.7168
All spots
Tokyo spots
Europe spots
Volatilities
Tokyo Forex market info from BOJ
(Reporting by Kevin Buckland; Editing by Christopher Cushing)
