HONG KONG- The dollar index, which tracks the greenback against six main peers, was a fraction lower at 106.3, having ended on Tuesday largely unchanged.
The index has recovered most of the ground it lost last week after a cooler-than-expected US inflation reading but remains well off its mid-July top of 109.29.
The Australian and New Zealand dollars were volatile in Asia on Wednesday, before ending up back near where they started, providing some excitement ahead of the release of minutes of the US Federal Reserve’s latest meeting later in the day.
The kiwi jumped to as high as $0.6383 after the Reserve Bank of New Zealand hiked rates by an expected 50 basis points (bps) and pointed to the need to bring forward the timing of future rate increases.
The currency then pared its gains and was last 0.28 percent higher at $0.6361.
“It (the RBNZ’s remarks)was marginally on the hawkish side, enough to keep the pressure on rates,” said Jason Wong, senior market strategist at BNZ, who said the track for the official cash rate implied another 50 bps hike in October.
Across the Tasman Sea, the Australian dollar fell as much as 0.5 percent after data showed Australian wage increases missed forecasts and lagged badly behind inflation. It later pared those losses to trade down 0.15 percent, holding back just above the symbolic $0.7 level.
“The Fed’s beef with the market in recent days and weeks has been that they (the Fed) don’t subscribe to the market’s view that it will be cutting rates in 2023,” said Ray Attrill, global head of FX strategy at National Australia Bank.
“So if there are things in the minutes that push back against that notion, and that leads to a repricing of the US rate curve for 2023, that could be a catalyst for a reversal of the US dollar weakness that has characterized this last month or so.” — Reuters