Dollar remains stable in early trade

5 Jul 2023 , 11:24 AM

On Wednesday, as traders anticipate the release of the minutes from the Federal Reserve’s most recent meeting for hints about the direction for monetary policy, the dollar dipped towards the middle of its range over the previous three weeks against key peers.

The dollar index, which compares the value of the dollar to a basket of six important currencies, including the euro and the yen, fluctuated between 103.75 and 102.75 since early June. It was barely changed at 103.02.

The common currency of Europe increased by 0.1% to $1.0886, recovering some of its overnight loss of 0.34%.

After last week’s brief spike to a high of 145.07 for the first time since November, the dollar remained almost half a yen below the 145 level that prompted intervention by Japanese authorities last autumn.

The U.S. 10-year Treasury yield, which fell as low as 3.841% in Tokyo after trading resumed after the July 4th vacation, has been closely watched by changes in the dollar-yen exchange rate.

The Australian dollar stayed unchanged at $0.6690, holding onto the day’s gain of 0.32%.

The Australian dollar initially fell on Tuesday as the Reserve Bank of Australia held interest rates steady, but it quickly recovered as traders predicted that the tightening cycle will restart with one or even two additional rate hikes planned.

The Antipodean currency was supported by a higher Chinese yuan, which boosted hopes for assistance from Beijing to support a weak economic rebound in Australia’s main trading partner.

Following a 0.3% increase on Tuesday, the yuan was little changed in offshore trading at 7.231/$, continuing its recovery from last week’s eight-month low of 7.2857.

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