Investing.com – The dollar traded flat on Wednesday, as investors opted for caution, despite hawkish comments from Philadelphia Federal Reserve head, Patrick Harker, ahead of the release of the Fed’s minutes to its May meeting.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose by 0.04% to 97.31 by 12:58 EDT.
Philadelphia Fed, Patrick Harker on Tuesday, stoked expectations for a June rate hike, after he reiterated his support for a total of 3 rate rises this year, but warned that the slower pace of inflation may deter the Fed from adopting an aggressive rate hike policy.
"I think June's a distinct possibility ... quite possible," Patrick Harker told reporters. But "if we get another surprise on inflation to the downside, that would worry me a little."
Investors are expected to parse the Fed minutes to its May meeting later today, to gauge whether recent economic data and geopolitical developments have deterred the U.S. central bank from its previously stated commitment of a total of three rate hikes for 2017.
The Fed kept its benchmark rate unchanged in May, and its accompanying statement highlighted that growth in economic activity had slowed in the first quarter while household spending rose "only modestly".
According to investing.com’s Fed rate monitor tool, nearly 75% of traders expect the Fed to hike interest rates in June.
The dollar suffered a blow against its Canadian counterpart, as USD/CAD fell to $1.3458, down 0.41%, after the Bank of Canada kept interest rates unchanged and said recent economy data have been "encouraging".
EUR/GBP rose 0.19% to 0.8645 while EUR/USD traded flat at $1.1178, down 0.04%, as investors appeared to take profits in the single currency, which has rallied nearly 7% year-to-date against the dollar, after Emmanuel’s Macron election victory in early May, eased uncertainty surrounding the future of European Union.
GBP/USD fell to $1.2931, as investors continued to mull over recent polls over the weekend, showing the Labour Party had narrowed the large lead that had been enjoyed by the Conservative Party.
USD/JPY rose by 0.24% to 112.05.