The dollar's decline on Tuesday was also spurred by reduced
demand for its safety after what Attrill called "blockbuster"
Chinese economic growth data that day, which in turn buoyed
Australia's risk-sensitive currency.
The Aussie was about flat at $0.6730 on Wednesday,
following a 0.41% rally in the prior session.
The euro eased slightly to $1.0967 after Tuesday's
0.42% rise. Sterling slipped a touch to $1.2420
following the previous day's 0.38% advance.
The dollar index last year culminated a breathless 16-month
surge by hitting a two-decade high of 114.78 at the end of
September, which was followed by a steep, steady retreat until
the start of February.
It then bounced as a banking crisis ignited worries of a
global recession, reaching a three-month peak in early March.
However, bank earnings from recent days have proved robust
overall, and bond yields have recovered strongly from
multi-month lows reached last month.
"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 and
Edmund Klamann)
By Kevin Buckland
TOKYO, April 19 (Reuters) - The dollar steadied on
Wednesday after seesawing along with bond market volatility in
recent sessions, 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 0.09% to 101.81 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.
The dollar-yen pair, which tends to track U.S. yields, added
0.19% to 134.35 yen per dollar , recovering from a
0.29% retreat on Tuesday.
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 as many as two quarter-point 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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