The dollar firmed slightly in Asian trading as it was supported by comments from Atlanta Fed President Dennis Lockhart that interest rates are likely to go up this year. Speaking in Atlanta on Monday, Lockhart said he is ‘confident’ that interest rates will be raised later this year and that September’s decision was a ‘close call’.
The comments are consistent with other Fed officials who voiced similar opinion in recent days. On Saturday, Richmond Fed President Jeffrey Lacker said he voted to raise rates at September’s meeting, while St. Louis Fed President James Bullard, who is not a voting member, said he would have also voted for a rate hike.
The dollar held above the 120 level against the yen in today’s Asian session. It was last trading at 120.42 yen. The euro continued to slide against the dollar and was down at 1.1162 dollars. It was also lower against the pound at 0.7202 as it struggled to stay above the 0.72 handle. Cable was also weaker as it was trading around the 1.55 level in late Asian session.
In China, shares were set to close higher for a third straight day but trading in Asia was thin due to a 3-day national holiday in Japan. The Chinese leader, President Xi, promised to press ahead with economic reforms as well as to continue with market-based reforms of the yuan. Speaking in the United States, President Xi sought to allay fears of further depreciation of the yuan and said that the drop in China’s foreign currency reserves as a result of supporting the yuan was ‘moderate and manageable’.
The Australian and New Zealand dollars were mostly flat on Tuesday on quiet trading. The aussie was up slightly at 0.7150 against the dollar, while the kiwi was firmer at 0.6328 in late Asian session.
Oil prices headed lower today on profit taking after Monday’s 4% rally. US oil futures were down 1.4% at $46.02 in late Asian trading.
The lack of any major data releases means today is set to be another quiet day. But UK public sector net borrowing, Eurozone consumer confidence and the Richmond Manufacturing index in the US are likely to attract some attention.