The dollar had strengthened yesterday after Fed Vice Chairman Stanley Fischer said the U.S. economy was close to meeting the central bank’s goals, suggesting a rate increase was possible by December.
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The dollar was trading at 100.59 yen in early Tokyo trade, up from 100.20 yen in NY.
The biggest mover among developed-world currencies on Tuesday was the New Zealand dollar, which rose 1 per cent to $0.7339 after Reserve Bank of New Zealand Governor Graeme Wheeler said he did not see the need for a rapid succession of interest rate cuts.
World shares crept up on Tuesday while the dollar lost ground as investors awaited further clues on whether the Federal Reserve will raise U.S. interest rates this year.
The dollar index, which tracks the greenback against a basket of six major rivals, was up 0.2 percent in early trade at 94.722 .DXY , pulling away from last week’s low of 94.077, which was its lowest since June 24.
Asian shares slipped on Monday and the dollar pulled away from last week’s lows on expectations that a signal might emerge from a Federal Reserve gathering this week in Jackson Hole, Wyoming that the USA central bank is gearing up to hike interest rates.
The greenback was given a boost over the weekend when Vice Chairman Stanley Fischer said the Fed was getting close to its job and inflation targets, prompting speculation that a rate hike could come as soon as September. The kiwi nevertheless rose to a 15-month high of $0.7351 mid-month.
The index, which gauges the strong point of the dollar against a basket of six other major currencies, increases as much as 0.40% before finishing the US afternoon session at 94.48, up 0.0029 on the day, on Friday.
“But in reality, the response has been very muted”. The euro declined to $1.1296 from $1.1325.
On Monday, the blue-chip CSI300 index had its worst day in three weeks, shedding 0.9 per cent while the SSEC dropped 0.7 per cent. This week, the pair lost 1.1%, the 4th straight weekly weakening.
A quarter-point hike is not fully priced in until September 2017.
Oil remained under pressure after shedding 3 percent on Monday.
Biotech stocks received a boost from Pfizer’s $14 billion acquisition of cancer drug maker Medivation, which jumped almost 20 per cent.
Crude oil futures dropped, giving back some of their recent gains that propelled oil into bull market territory, after technicals had it in a bear market early this month.
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Brent crude was down 1.8% to 49.98 U.S. dollars a barrel. It hit a two-month high of $51.22 on Friday. United States crude futures fell 36 cents to $47.07, after the September contract expired on Monday at $47.05. The dollar rose against the yen and euro on Monday as traders reassessed expectations for Fed action on rates after policymakers’ comments last week.
