Dollar remains stable in early trade

21 May 2024 , 08:13 AM

Tuesday saw the dollar remain stable while the yen struggled on the downside of the 156 level. However, the session remained mainly rangebound as most investors kept to their predictions regarding the number and timing of this year’s Federal Reserve rate cuts.

With increasing expectations of the U.S. Securities and Exchange Commission (SEC) approving spot ether exchange-traded funds (ETFs), cryptocurrency prices spiked, driven by a spike in ether.

In the early Asian session, the dollar gained 0.07% against the yen, hitting 156.37.

Over the past several sessions, the yen has fluctuated within a narrow range as traders have refrained from driving the currency to all-time lows due to concerns about additional intervention from Japanese authorities. Nonetheless, the yen’s attractiveness as a lending currency was preserved by the significant differences in interest rates between the United States and Japan.

In other news, the euro increased by 0.03% to $1.0860 while the pound added 0.03% to $1.27095.

Focus shifts to a number of Fed speakers for hints on the U.S. rate outlook and when an easing cycle could start, as there is little on the schedule of U.S. economic data this week that could influence the direction of currency movements.

Even if statistics released last week indicated a welcome abatement in consumer price pressures in April, a number of policymakers on Monday urged for ongoing prudence in policy.

Even then, investors are counting on two rate cuts this year starting in September, so the cautious tone from the Fed hasn’t had a big impact on market pricing.

The Australian dollar increased by 0.1% to $0.6674 ahead of the Reserve Bank of Australia’s May meeting minutes, which are expected later on Tuesday. The New Zealand dollar remained mostly unchanged at $0.6107.

In relation to a currency basket, the dollar remained stable at 104.61.

Ether experienced a significant increase of over 5% to reach a one-month high of $3,691.80. The previous session saw a rise of nearly 14%, which was the greatest daily percentage gain since November 2022.

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