🔮 Better than the Oracle? Our Fair Value found this +42% bagger 5 months before Buffett bought itRead More

Dollar retreats after strong Fed-inspired gains

Published 07/06/2023, 03:26 AM
© Reuters.

Investing.com - The U.S. dollar edged lower in early European hours Thursday, handing back some of its overnight gains after the minutes from the Federal Reserve's last meeting pointed to another rate hike later this month.

At 02:55 ET (06:55 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% lower to 102.945, after rising 0.5% overnight.

Fed minutes firm rate hike expectations

The Fed minutes, released on Wednesday, showed that almost all members of the central bank supported more rate hikes in the coming months, citing stubborn inflation and an overheated labor market.

This has raised expectations for an increase at the Fed’s next meeting later this month, boosting the dollar.

"We see room for a dollar rebound in the near term. The U.S. economy looks in better shape than Europe and Asia, which suggests 'higher for longer' is somewhat more credible coming from the Fed than most others," said Jonas Goltermann, an economist at Capital Economics.

German factory orders jump

EUR/USD rose 0.1% to 1.0865, helped by data showing German industrial orders rose significantly more than expected in May, climbing by 6.4% on the month, significantly better than the predicted 1.2% increase.

The European Central Bank is widely expected to increase interest rates again later this month, and Governing Council member Joachim Nagel said earlier this week that further hikes are likely even though decisions remain data-dependent.

Yuan near eight-month low

USD/CNY traded largely unchanged at 7.2472, with the yuan remaining just shy of an eight-month low after data this week showed that Chinese business activity deteriorated for a third straight month in June.

Also weighing on the Chinese currency were concerns over worsening trade relations between Washington and Beijing, as the two economic superpowers battle for dominance in the field of semiconductor chips.

Elsewhere, GBP/USD traded flat at 1.2704, while USD/JPY fell 0.6% to 143.76, amid continued speculation over government intervention in currency markets, and AUD/USD rose 0.4% to 0.6678, helped by stronger-than-expected trade data for May.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.