By Gina Lee
Investing.com – The dollar was higher Tuesday morning in Asia as it returned from a nearly five-month low. Investors continued to bet that the US Federal Reserve will change its stimulus measures sooner than expected after the release of positive economic data on Tuesday.
The US dollar index that tracks the greenback against a basket of other currencies edged up 0.11% to 89.920 at 1:28 am ET (5:28 GMT).
USD / JPY was up 0.25% to 109.72.
AUD / USD edged down 0.09% to 0.7747 after Australia released better than expected gross domestic product earlier today. GDP grew 1.8% qoq and 1.1% yoy for the first quarter of 2021. The NZD / USD pair edged down 0.10% to 0.7248.
USD / CNY was up 0.06% to 6.3832. Investors continue to watch the recent rise in the yuan after the People’s Bank of China tightened banks’ foreign exchange reserve requirements to dampen the appreciation of the yuan. The restrictions pushed the offshore yuan lower from its three-year high of 6.3526 touched on Monday.
GBP / USD rose 0.01% to 0.4148, with Bank of England Governor Andrew Bailey due to speak later today.
“The direction of the dollar is definitely at the center of our concerns,” Shinichiro Kadota, senior currency strategist at Barclays (LON: BARC) in Tokyo, told Reuters, adding that “the market is divided in his opinion.”
Some U.S. Federal Reserve officials insisted the price pressure would be temporary, while some investors remained concerned that potential soaring inflation would eventually force the central bank to change its current monetary policy sooner. provided that.
“Even if inflation continues to exceed, I think the Fed will continue to say it’s temporary, but the market won’t know for sure until the fall, so we’re a little stuck in that uncertainty,” he said. said Kadota.
In the United States, data released Tuesday showed the Institute of Supply Management (ISM) Purchasing Managers Index (PMI) rose 61.2 in May, driven by increased demand under ‘reopening of businesses. That’s better than the 60.9 figure in the forecast prepared by invest.com and April’s 60.7 reading. However, the data also indicated supply shortages and labor constraints.
Investors are now awaiting new US data, including non-farm wages, due Friday for clues to the economic outlook. Its much lower than expected reading in April led the dollar to collapse 0.7% on May 7.
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