By Gina Lee
Investing.com – The dollar was up on Wednesday morning in Asia as fears over U.S. Treasury Secretary Janet Yellen’s comments about hiking interest rates receded.
The that tracks the greenback against a basket of other currencies was up 0.31% to 91.210 by 13:03 AM ET (5:03 AM GMT).
The pair was steady at 109.32.
The pair was up 0.35% to 0.7732. The pair gained 0.38% to 0.7169. The New Zealand dollar was boosted by stronger-than-expected local employment data, including the that grew 0.6% quarter-on-quarter during the first quarter of 2021.
The pair was steady at 6.4735. The pair edged up 0.15% to 1.3906 as investors await the Bank of England that will be handed down on Thursday.
Trade was limited in Asia with the Japanese and Chinese markets closed for a holiday. A selloff in tech stocks overnight soured risk appetite and gave the safe-haven U.S. currency an additional boost.
A strengthening dollar pressured the euro into a $1.2012 fall and threatened to breach important chart support in the $1.1995 to 1.2000 range.
“If sustained, this could suggest today’s session may be important for near-term direction, particularly if the pair managed to close below the key $1.20 pivot… we think we will need to see a daily close below the $1.20 mark to give more credence to observations that the USD tends to appreciate broadly during the month of May.” TD Securities European head of FX strategy Ned Rumpeltin told Reuters.
Rumpeltin also said that the dollar had averaged gains against each of its G10 counterparts in May over the last decade.
on Tuesday, suggesting that rising interest rates will be necessary to prevent the economy from overheating, also contributed to the dollar’s gains.
Yellen did clarify later that day that the comments were not predicting an imminent rate hike from the U.S. Federal Reserve, but the suggestion of a tightening monetary policy was enough to shake a market over-dependent on monetary stimulus.
Fed Chairman Jerome Powell also stated earlier in the week that the labor market is still far short of where it needs to be to start talking of tapering asset buying. Investors are now looking to the ADP National Employment Report, due later in the day, and the April employment report, including , due on Friday. The is also due later in the day.
One challenge that remains for the dollar is a U.S. trade deficit that widened to a record $74.4 billion in March.
“This is a medium-term weight on the dollar because the U.S. will become increasingly dependent on long-term foreign investments to finance the current account deficit… as a result, we believe the recent dollar downtrend has further to run,” CBA senior economist & currency strategist Kim Mundy told Reuters.
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