By Kevin Buckland
TOKYO (Reuters) – The dollar hovered near a one-week high on Thursday after hitting its highest level this month against major peers after minutes of the last Federal Reserve meeting showed some officials were keen to raise interest rates.
The New Zealand dollar extended gains after a surprise increase in domestic retail sales added to the hawkish guidance from the central bank a day earlier which led it to back off bets on a rate cut.
The pound remained firm after surging to its highest level in a month on better-than-expected inflation and was also supported by the announcement that UK parliamentary elections will be held on July 4.
Ether continued to hover near its highest level in more than two months on Tuesday amid growing speculation over the possible approval of a U.S. cash exchange-traded fund that tracks the world’s second-largest cryptocurrency.
The dollar index, which tracks the greenback against six major currencies including the pound, euro and yen, was little changed at 104.85 after rising 0.28 percent overnight.
Fed officials indicated at their April 30-May 1 meeting that they still believe price pressures will ease, albeit slowly, but the meeting summary also reflected discussion of possible tightening.
“The minutes revealed concerns that inflation may not fall as rapidly as expected and that some members believe they are open to further rate hikes if necessary,” James Knyveton, senior corporate foreign exchange dealer at Convera, said in a client note, supporting the dollar.
“As a result, expectations for the first rate cut have shifted from September to November. Markets will be volatile in early November, as the US Federal Reserve (Fed) meeting will take place immediately after the US election. there is a possibility.”
The dollar was little changed at 156.755 yen, after rising overnight to 156.85 yen, its highest since May 1, even as traders were wary of the risk of Japanese authorities stepping in to support the currency.
A Reuters survey conducted on Thursday found that nearly half of Japanese companies said a fall in the yen’s value beyond 155 to the dollar would have a negative impact on their business, nearly double the proportion of companies that see a weaker yen as a positive.
To counter the yen’s weakening, 37% of respondents wanted the central bank to raise interest rates again, while 34% wanted the government to intervene in the foreign exchange market.
The euro rose 0.08% to $1.08305, but remained near its overnight low of $1.08175.
Sterling held steady at $1.2723 after rising to $1.27610 on Wednesday for the first time since March 21, as sticky inflation dashed the Bank of England’s bet on a June interest rate cut.
Meanwhile, Chancellor Rishi Sunak has called a general election which is widely expected to see the Conservative Party, in power for 14 years, lose to the opposition Labour Party.
TD Securities analysts wrote in a note: “If Labor wins and a softer Brexit is expected, sterling will strengthen, especially against the euro.”
“However, inflation and interest rate differentials remain the main drivers of currency movement, especially in the first rate cut, so the pound is likely to trade on this basis only around election day.”
The New Zealand dollar rose 0.4% to 0 after data released on Thursday showed New Zealand retail sales rose 0.5% in the first quarter, defying expectations for a modest decline. ．It was 6121 dollars.
The Reserve Bank of New Zealand surprised markets on Wednesday by raising its forecast for peak interest rates and pushing back when it expects to cut rates.
Among cryptocurrencies, Ether was trading at around $3,769, up slightly from Wednesday’s closing price. On Tuesday, it rose to $3,838.80 for the first time since March 15.
Bigger rival Bitcoin was little changed at $69,432, after hitting $71,957 on Tuesday for the first time since April 9.
(Reporting by Kevin Buckland; Editing by Kim Coghill)
