Tokyo and Singapore (Reuters) – The dollar held on in choppy trading on Wednesday, a day after it had its biggest rise in weeks as Federal Reserve officials talked up the possibility of more aggressive interest rate hikes.
The US dollar index, which compares the value of the US dollar to six major currencies, fell about 0.3 percent to 106.120 by the afternoon in Asia. This was partly because House Speaker Nancy Pelosi’s trip to Taiwan didn’t bring any big surprises.
The euro went up 0.2 percent to $1.1085, but it is still under pressure. The yen, on the other hand, recovered some of its overnight losses by rising 0.3 percent to 132.71 per dollar.
Pelosi’s visit to Taiwan, which China considers a breakaway province, made Beijing angry. As a result, warplanes buzzed the Taiwan Strait and live-fire military drills were announced, even though investors thought this was likely to happen.
Moh Siong Sim, a currency strategist at the Bank of Singapore, said, “The market got a little less tense, maybe because of the situation between the U.S. and China.” “I think the market was probably ready for something worse to happen, so maybe nothing is good news.”
On Tuesday, Fed officials Mary Daly and Charles Evans said that they and their colleagues are still “completely united” in wanting to raise interest rates to a level that will slow the economy down more.
Yields and the dollar went up because of what “the normally very dovish Daly” and “the equally very dovish Evans” said. The dollar index could go above 108 in the next few weeks, said Kristina Clifton, a strategist at Commonwealth Bank of Australia (OCT: CMWAY).
The benchmark 10-year Treasury yield was unchanged on Wednesday after jumping almost 14 basis points the night before. [US/]
Sterling went up by 0.2% to $1.2180, while the Antipodeans were stuck near Tuesday’s lows and seemed to be taking a break from a month-long rally. [GBP/]
The Australian dollar fell on Tuesday after the central bank said that future rate hikes could be slowed down or stopped. Last time, it was still at $0.6930. [AUD/]
The New Zealand dollar went down after an unexpected rise in unemployment. This made people less likely to expect a rate hike. The last price was $.06255.
