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The U.S. dollar held steady on Wednesday as investors tempered their risk appetite ahead of the release of Federal Reserve policy meeting minutes that could offer clues to the outlook for inflation and interest rates. .
The Fed will release the minutes of its last meeting on Wednesday, with investors looking for any signs of talks about moderating the pace of interest rate hikes.
The dollar indexwhich measures the greenback against six major peers, was last up 0.056% at 107.130, after slipping 0.65% overnight.
The overnight move reflects better risk sentiment as stocks and bonds rallied on better corporate earnings and expectations of slower rate hikes from the Fed, Carol Kong said. currency strategist at the Commonwealth Bank of Australia.
Fed Chairman Jerome Powell said this month that while borrowing costs are expected to rise further, the central bank may raise interest rates in smaller increments going forward.
On Wednesday, New Zealand’s central bank raised interest rates by 75 basis points to a nearly 14-year high of 4.25%.
The central bank said the cash rate needed to hit a higher level sooner than expected to keep inflation under control. It also raised the expected peak cash rate to 5.5% in September 2023.
The Kiwi rose 0.57% to $0.618, while Australian dollar rose 0.06% to $0.665.
Meanwhile, China has tightened restrictions in some cities due to a spike in Covid-19 cases. Chengdu City will conduct mass testing for residents for five consecutive days.
“The imposition of a new restriction in the short term will undoubtedly have a negative economic impact, but at least for now the market seems to be focused on the fact that in the medium term, China is looking to gradually move towards a life strategy with Covid,” said Rodrigo Catril, currency strategist at National Australia Bank.
“Having said that, we think setbacks are very likely in this process, so we should expect some spikes in market volatility along the way.”
The euro was up 0.03% at $1.0305, after gaining 0.6% overnight, while sterling last traded at $1.1888, up 0.04% on the day.
Cryptocurrencies have remained volatile, with bitcoins oscillating between losses and gains. It was last down 0.21% at $16,163.