The dollar hovered near multi-month lows on Tuesday with lofty commodity prices lending support to exporters’ currencies, though caution about U.S. inflation bringing forward rate rises kept the greenback from sliding.
The resource-sensitive Australian dollar sat by Monday’s two-month high and was steady around $0.7831. The similarly exposed Canadian currency, which hit an almost four-year high on Monday, held at C$1.2096 per dollar. The New Zealand dollar traded near its highest since February.
Sterling was also perched near its highest since March on the dollar and strongest since early April on the euro, as investors cheered forthcoming lockdown easing and receding risks of another Scottish independence referendum.
However further moves were kept in check by looming U.S. consumer price figures due on Wednesday, as traders worry that a big number might prompt the Fed to wind back monetary policy support sooner than expected.
Appearances later on Tuesday from U.S. Federal Reserve members John Williams, at 1430 GMT, and Lael Brainard, at 1600 GMT, will be parsed for clues as to central bank thinking.
The euro was broadly steady at $1.2142 after hitting a two-month top on Monday and the yen held at 108.81 per dollar.
FED TEST
Markets expect U.S. year-on-year inflation to hit 3.6% in April, juiced by the base effect of a pandemic year contraction.
Fed Chair Jerome Powell has shown every sign of staying patient on policy, even if the economy runs hot. However Dallas Fed President Robert Kaplan caused a stir last month by calling for beginning to talk about tapering, and there are growing signs that prices could keep rising at a clip if unchecked.
China's yuan dips as inflation concerns hit risk appetite
China's yuan weakened on Tuesday, pulling back from a nearly three-year high against the dollar a day earlier amid growing global concerns over inflation even as the central bank set firmer guidance.
Global risk appetite took a hit overnight ahead of the release of U.S. inflation data as traders worried that rising price pressures could lead to policy tightening.
Offshore yuan traded at 6.4235 per dollar, softer than Monday's close of 6.4226.
· Indonesia considers plan to tax trade in cryptocurrencies
Indonesia is considering a plan to tax the trading of cryptocurrencies after a surge in popularity among local investors, a tax official said on Tuesday.
Reference: Reuters
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