The dollar's decline on Tuesday was also helped by reduced
demand for its safety after what Attrill called "blockbuster"
Chinese economic growth data that day, which buoyed the
risk-sensitive Australian currency.
The Aussie eased 0.06% to $0.67245 on Wednesday,
following a 0.41% rally in the prior session.
The euro was steady at $1.09725 after Tuesday's
0.42% rise. Sterling slipped 0.09% to $1.2413 following
the previous day's 0.38% advance.
The dollar gained 0.17% to 134.31 yen , recovering
from a 0.29% retreat on Tuesday.
"A key driving force that used to support the broad USD
-i.e. weakening global growth - has been fading, if not
neutralised," HSBC analysts wrote in a client note.
"Its decline is likely to be larger than some may think."
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World FX rates ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Reporting by Kevin Buckland; Editing by Jacqueline Wong)
By Kevin Buckland
TOKYO, April 19 (Reuters) - The dollar steadied on
Wednesday after it seesawed with bond market volatility as
investors scrutinised U.S. economic indicators, Federal Reserve
commentary and corporate earnings for clues about the path for
interest rates.
The dollar index - which gauges the greenback against
six major peers - ticked up 0.11% to 101.83 in Asian trading,
following a 0.36% slide on Tuesday that reversed the 0.54% rally
of the session before. On Friday, the index had dipped to a
one-year low at 100.78.
U.S. two-year Treasury yields , which are
extremely sensitive to Fed expectations, reached an almost
one-month high of 4.231% overnight, and remained elevated in
Tokyo trading on Wednesday.
St. Louis Fed chief James Bullard told Reuters in an
interview that he leans toward 75 bps of additional tightening,
versus market consensus for one more 25 bp hike next month and
then the potential for cuts later this year. By contrast, Atlanta Fed President Raphael Bostic said in an
interview with CNBC that he expects just one more quarter point
hike, followed by an extended pause.
"The market is pretty much resigned to a 25 bps hike at the
May meeting, so it's more the ebb and flow of expectations about
rate cuts this year that's causing U.S. bond market volatility,"
said Ray Attrill, head of foreign-exchange strategist at
National Australia Bank.
"It's the volatility in the bond market that's driving the
dollar, not the other way round."
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