The dollar clung on to its recent small gains on Wednesday as traders looked to upcoming U.S. inflation data and a European Central Bank (ECB) meeting to gauge the pace of global recovery and policymakers’ thinking about paring back stimulus.
Investors have piled up bets against the dollar, but are growing nervous about whether the beginning of the end of enormous monetary stimulus is nigh - and worry that interest rate rises could end a 15-month dollar downtrend.
Some think tapering could be hastened, and the dollar boosted, if U.S. inflation runs hotter than the 0.4% monthly clip that economists expect. For the ECB, the focus is on any signs of an imminent slowdown to its bond buying programme.
Both are due on Thursday and the anticipation has all but killed volatility in major currencies, as traders assume a wait-and-see stance. The euro was steady at $1.2179 in the Asia session, while the dollar held at 109.47 yen.
Deutsche Bank’s Currency Volatility Index hit its lowest level since February 2020 on Tuesday, and sank even further on Wednesday. The U.S. dollar index was parked at 90.077.
Sterling edged slightly higher, but remained stuck within recent ranges as doubt has crept in over whether rising cases of the coronavirus’ Delta variant in Britain could delay business reopening plans scheduled for June 21. It last bought $1.4168.
Elsewhere, China’s yuan was steady around the 6.4 per dollar level on Wednesday, as a bill aimed at competing with China cleared the U.S. Senate, damping yuan bulls’ recent enthusiasm.
Bitcoin recovered from a three-week low it hit on Tuesday when signs of institutional investor caution and regulatory attention drove selling. It last bought $34,357.
Thai
Eng