Dollar steady as investors await economic data, Fed minutes
Follow us Now on Telegram ! Get daily 10 - 12 important updates on Business, Finance and Investment. Join our Telegram Channel
The U.S. dollar was mostly flat on Tuesday as investors awaited slew of economic data this week along with minutes of the last Federal Reserve meeting that will shed light on the Central bank's thinking around interest rates and inflation.
The dollar index, which measures the greenback against six major currencies, has made a subdued start to 2023 and was last up 0.068% at 103.710. The index rose 8% last year in its biggest annual jump since 2015 on the back of the Fed raising interest rates to tackle inflation.
The dollar is likely to consolidate as "market activity gradually picks up this week," said Christopher Wong, currency strategist at OCBC Bank in Singapore.
After delivering four consecutive 75 basis points hikes, the U.S. Central Bank raised interest rates by 50 basis points last month. The minutes of the December meeting is due to be released on Wednesday, with investors looking for cues on what path the Fed is likely to take in 2023.
Citi strategists said the minutes might become more interesting as there could be more of a divergence between the doves and the hawks regarding how high the terminal rate should go.
"We will also be looking for any guide on what could determine the size of the hike at the February meeting, but would not expect any concrete guidance," Citi said, adding they continue to expect a 50 basis points hike in February.
Investor attention will also be on the payrolls report due to be released on Friday.
Elsewhere, the Japanese yen strengthened 0.46% versus the greenback at 130.12 per dollar, touching their highest level since June.
Nikkei reported on Saturday that the Bank of Japan (BOJ) was considering raising its inflation forecasts in January to show price growth close to its 2% target in fiscal 2023 and 2024.
Upgrades to the BOJ's inflation forecast would likely fuel further speculation that the central bank is looking to tweak its ultra-loose monetary easing policy and would come after the BOJ jolted markets by widening its 10-year yield cap range.
Meanwhile, the euro was down 0.07% to $1.0655, while sterling was last trading at $1.2037, down 0.07% on the day.
