Dollar Increases as Investors Shift Focus to Fed Minutes

On Wednesday, the dollar increased as investors shifted their focus towards the Federal Reserve’s latest policy meeting minutes to look for hints on the future pace of U.S. monetary tightening.

Dollar edge up on Wednesday. 

The dollar index went up 0.1 percent to 89.805, which increased about 1.8 percent from last week’s three-year low of 88.251. Meanwhile, the greenback also went up 0.3 percent to 107.70 yen.

According to market players, the stop-loss dollar buying helped to boost the dollar, which increased to 107.90 yen at some point.

Market participant were the reason for the bounce in the dollar over the past sessions to short covering after speculative trades helped push it down to a 15-month low of 105.545 yen last week.

“It's mainly a positioning clean-up in my view,” Tareck Horchani, the head of sales trading in Asia Pacific, said.

Horchani stated that the dollar would possibly consolidate against the yen after its latest selloff.

Horchani also stated that some market players, who bought dollar/yen, has put options to position for dollar weakness, as the market is currently “well covered” against the downside risks in the U.S. currency.

Meanwhile, the yen did not have any reaction to the statement of Masatsugu Asakawa, Japan’s top currency diplomat, who stated that the recent moves of the yen were “one sided.”

In recent months, the U.S. currency has been declining against other major currencies including yen, with the positive impetus from the increasing U.S. interest rates offset by bearish factors, such as the fears that the U.S. could pursue a weaker dollar policy.

“I would characterize the rebound this week as more of a technical rebound. The underlying bias is still for dollar weakness,” Heng Koon How, the head of markets strategy for United Overseas Bank, stated.

 

Aussie Eases against the Dollar

In other news, Aussie eased at 0.23 percent against the dollar at 0.7865 after Australia Bureau Statistics released the construction data.

Meanwhile, Q4 Wage data has reported 0.6 percent quarter-on-quarters instead of the expected 0.5 percent.

In another place, USD/CNY rose at 6.3453, up 0.06 percent.

Trade12 is a community of brokers and investors serving the quality service to all present and potential clients. Join our community. Trade12 awaits you!