By Gina Lee
Investing.com – The dollar was down on Wednesday morning in Asia after China tightened its banks’ forex requirements to curb the appreciation of the yuan. Investors also await key U.S. economic data to gauge the country’s economic outlook.
The that tracks the greenback against a basket of other currencies edged down 0.21% to 89.808 by 1:26 AM ET (5:26 AM GMT).
The pair inched up 0.05% to 6.3717. were forced by the People’s Bank of China to hold more foreign currencies in reserve for the first time in more than a decade in order to stem the yuan’s surge.
The pair inched down 0.03% to 109.51.
The pair inched up 0.10% to 0.7742 as the handed down its policy decision and kept its interest rates unchanged at 0.10%. The pair inched up 0.08% to 0.7274.
The pair edged up 0.19% to 1.4236.
Investors are still digesting data released during the previous week that said the increased 3.1% year-on-year in April, above the Fed’s 2% target and the argest annual gain since 1992.
Trimmed measures of inflation, which eliminate the most extreme price changes, show the U.S. has no inflation problem, and markets will need to unwind some of the expectation for near-term policy tightening, which will weigh on the dollar, said Joseph Capurso, a strategist at the Commonwealth Bank of Australia (OTC:).
Fed Vice Chair Randal Quarles and Fed Governor Lael Brainard are due to speak later in the day.
On the data front, investors now await U.S. data, including and the in May, due to be released on Friday.
The U.S. shows no inflation problem without considering trimmed measures of inflation, and investors don’t need to be concerned about an earlier-than-expected policy tightening, which will weigh on the dollar, Commonwealth Bank of Australia strategist Joseph Capurso told Reuters.
Meanwhile, the global economic recovery from Covid-19 will provide an additional headwind, according to Capurso.
“The world economy is clearly recovering, and that is going to be bad for the U.S. dollar because it’s a counter-cyclical currency…The U.S. dollar has been pretty heavy in the last few weeks, and I think it keeps trending lower,” he told Reuters.
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