The dollar rose to a seven-week high on Wednesday after Federal Reserve meeting minutes boosted speculation that the central bank will raise interest rates as soon as June.
Emerging-market currencies slumped on the prospect of higher U.S. interest rates, with the Brazilian real, South Africa’s rand and the Russian ruble pacing declines.
“The greenback should be bid here,” said Bipan Rai, executive director of foreign-exchange strategy at Canadian Imperial Bank of Commerce in Toronto. “The minutes suggest that the odds of a June hike or even a signal in June for a July hike are more likely than the market was prepared for.”
The Bloomberg Dollar Spot Index, which tracks the greenback versus 10 peers, was little changed as of 8:26 a.m. in Tokyo after climbing 0.8 percent on Wednesday and reaching the highest level on a closing basis since March 28. The U.S. currency was at $1.1225 per euro from $1.1216 on Wednesday, when it added 0.9 percent. It fetched 110.10 yen from 110.19.
The likelihood of the Fed raising rates at its June 14-15 meeting more than doubled from Tuesday to 32 percent, while the chances of a move by September rose to 62 percent from 47 percent the previous day, according to data based on fed fund futures compiled by Bloomberg.
Fed officials “have been building the case for a potential June hike over the past few weeks, with more hawkish undertones in their speeches,” said Minh Trang, a senior foreign-exchange trader at Silicon Valley Bank in Santa Clara, California. “They may not want to make the mistake of waiting too long, only to see the environment weaken and lose an opportunity to hike.”
Reference: Bloomberg
Thai
Eng