SINGAPORE- The US dollar was firm in Asia trade on Wednesday following surprisingly strong US housing data, while the yuan and Aussie dollar nursed losses and focus turned to Federal Reserve Chair Jerome Powell’s appearance before Congress later in the day.
Single family housing starts surged 21.7 percent in May against expectations they’d be more or less flat. Traders discounted it somewhat since the jump wasn’t led by a leap in permits, but it still gave the dollar a boost ahead of Powell’s testimony.
The greenback was marginally stronger at $1.0916 per euro overnight and steady early in the Asia session. The yen was also firm at 140.50 per dollar ahead of an appearance by Bank of Japan Governor Kazuo Ueda on Wednesday.
The Aussie and yuan were Tuesday’s largest losers and were in no mood for a bounce early on Wednesday. China had cut rates by less than expected and while its post-COVID recovery stalls, hoped-for major stimulus is yet to arrive.
The yuan fell about 0.3 percent overnight and in offshore trade early on Wednesday the currency was pinned at 7.1826 per dollar, near a seven-month low.
With China’s Premier Li Qiang abroad in Europe, traders see an imminent announcement of further stimulus as unlikely.
The Aussie had taken a further beating thanks to Tuesday’s less-hawkish-than-expected central bank minutes following this month’s rate hike. It fell 0.9 percent overnight and last bought $0.6790.
“The path of least resistance is further declines,” said Commonwealth Bank of Australia strategist Joe Capurso.
“The Aussie could dip below 0.6700 this week, particularly if Powell is hawkish,” he said. Powell is due to begin his testimony at 1400 GMT.
The New Zealand dollar was dragged lower in sympathy, breaking below its 50-day moving average before steadying just above its 200-day moving average at $0.6168.
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