Investing.com – The US dollar climbed higher on Tuesday ahead of the start of the Federal Reserve’s latest policy-setting meeting, while the Japanese yen retreated after a suspected intervention.
At 04:40 ET (08:40 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was trading 0.3% higher at 105.780, on target for a gain of around 1.4% in April.
Fed meeting threatens to be big
The dollar was generally in demand this month after a string of higher-than-expected inflation data in the US led traders to cut early interest rates by the .
The US central bank begins its latest two-day meeting later in the session and is widely expected to keep interest rates at the high level of 5.25%-5.5% when it concludes its meeting on Wednesday.
Investors will be waiting for clues as to whether the Fed still expects to cut rates at some point this year, after initially expecting the first rate cut to come in March, then June and now September.
The euro is struggling despite German retail sales growth
In Europe, yields fell 0.2% to 1.0702, struggling to gain ground against the strong dollar even after data releases showed March’s rise was stronger than expected.
Retail sales rose 1.8% compared to the previous month, indicating a recovery in consumption, which bodes well for the eurozone’s largest economy, which just managed to avoid a recession.
Traders are awaiting the release of the latest inflation and growth data for the eurozone as a whole later in the session.
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The preliminary forecast is that the eurozone will have risen by 2.4% in April year-on-year, still marginally above the ECB’s medium-term target of 2.0%, while the region is expected to gain only 0% in the first quarter .1%, a growth of only 0.2% on an annual basis. base.
The ECB has indicated that it is likely to cut deposit rates in June, but there is still a high degree of uncertainty about how many other cuts, if any, will take place this year.
fell 0.2% to 1.2534, retreating in the wake of the dollar’s strength, while the pound is expected to fall around 0.7% this month.
Yen withdraws after suspected intervention
In Asia, yields rose 0.4% to 156.88, with the yen falling slightly against the dollar after sharp gains in the previous session that suggested government intervention.
The pair is still far from the previous session’s 34-year high of 160.245.
Japanese officials have refused to confirm an intervention to support the yen, but the country’s top currency diplomat, Masato Kanda, said on Tuesday that authorities stood ready to handle foreign exchange matters around the clock.
Mixed Japanese data reflected on yen weakness on Tuesday. Although interest rates rose more than expected in March, they fell well short of expectations, providing a muted outlook for consumer spending and inflation.
traded 0.1% higher at 7.2416 after mixed purchasing managers index data pointed to some slowdown in the Chinese economy.
Official data showed activity slowed slightly less than expected but grew significantly less than expected.
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fell 0.6% to 0.6527, with the Australian dollar hit by the release of substantially weaker than expected data.
