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Dollar drifts higher in Asia as Fed rate views awaited

5/3/2017, 11:34:35 AMMarket Analysis
Dollar drifts higher in Asia as Fed rate views awaited

The dollar drifted slightly higher in Asia ahead of the latest Fed views on interest rates due later in the day, with regional activity think on holidays in several markets.

Markets in Japan, South Korea and Hong Kong were closed on Wednesday with unemployment data out of New Zealand dipping to 4.9% in the first quarter, below the expected 5.2% rate for the only major data point regionally on the day.

NZD/USD traded at 0.6951, up 0.25%, after the data. USD/JPY changed hands at 112.06, up 0.05%, while AUD/USD traded at 0.7527, down 0.11%.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose by 0.01% to 98.79.

The dollar traded flat against a basket of major currencies on Tuesday, as investors anticipated that the Federal Reserve would leave its benchmark rate unchanged on Wednesday.

In what was a quiet day for top-tier economic data release, the dollar remained in period of consolidation, as investors seemed hesitant to initiate large dollar positions, as the Federal Reserve Open Market Committee (FOMC) commences its two day meeting, ahead of an interest rate decision, scheduled for Wednesday.

Economists’ forecast that the Fed will leave its benchmark rate unchanged but investors are likely to parse through the Federal Reserve statement for any hints concerning a June rate hike.

According to investing.com’s Fed rate monitor tool, 62.4% of traders expect the Federal Reserve to hike interest rates in June. Elsewhere, the final round of the French election, scheduled for Sunday May 7, offset weaker than expected economic data as current polls predict an easy victory for pro-EU candidate Emmanuel Macron.