{"id":115569,"date":"2021-06-01T12:56:59","date_gmt":"2021-06-01T12:56:59","guid":{"rendered":"https:\/\/fin2me.com\/?p=115569"},"modified":"2021-06-01T12:56:59","modified_gmt":"2021-06-01T12:56:59","slug":"dollar-steadies-yuan-slips-after-central-bank-moves-to-limit-gains","status":"publish","type":"post","link":"https:\/\/fin2me.com\/markets\/dollar-steadies-yuan-slips-after-central-bank-moves-to-limit-gains\/","title":{"rendered":"Dollar steadies, yuan slips after central bank moves to limit gains"},"content":{"rendered":"
LONDON, (Reuters) -The dollar hovered near five-month lows on Tuesday, losing out to commodity currencies, as investors waited for economic data to indicate the future direction for major currencies.<\/p> The dollar index was back below 90 in early European trading, having hit as high as 90.447 on Friday, when a measure of U.S. inflation closely watched by the Fed posted its biggest annual rise since 1992.<\/p>\n Fed officials, led by Chair Jerome Powell, have said repeatedly they expect price pressures to be transitory and monetary stimulus to stay in place for some time, but investors are wary that a strong pandemic recovery could force the Fed\u2019s hand.<\/p>\n The euro was steady at $1.2223, reacting little to data which showed euro zone inflation surged past the European Central Bank\u2019s target in May.<\/p>\n \u201cI don\u2019t think markets are paying too much attention to any overshoot in inflation at the moment,\u201d said Simon Harvey, FX analyst at Monex Europe.<\/p>\n \u201cThe next quarter\u2019s worth of inflation data is completely riddled with base effects and other temporary factors, so it\u2019s very hard for markets and policymakers to strip out the signal from that noise.\u201d<\/p>\n \u201cInstead they\u2019re looking towards things like commodity markets, like labour markets, and wage pressures and so forth, and the dislocation in those markets between demand and supply.\u201d<\/p>\n Commodity currencies were generally stronger versus the dollar, as oil prices rose on expectations for growing fuel demand.<\/p>\n The Organization of the Petroleum Exporting Countries and allies – known as OPEC+ – is likely to stick to the existing pace of gradually easing oil supply curbs when it meets on Tuesday, OPEC sources said.<\/p>\n The Australian dollar was up around 0.1% at 0.7738 at 1138 GMT.<\/p>\n Australia\u2019s central bank left its cash rate at record lows and reiterated its lower-for-longer policy stance, even as data showed the country\u2019s output was above its pre-pandemic level.<\/p>\n The Norwegian crown was up 0.6% against the dollar at 8.2545.<\/p>\n The New Zealand dollar was down 0.2% at 0.7263. The Reserve Bank of New Zealand surprised markets last week by hinting at a future interest rate hike.<\/p>\n China\u2019s yuan was steady after authorities ordered banks to increase their foreign exchange reserve ratio, a move seen as an attempt to limit the fast yuan appreciation.<\/p>\n The offshore yuan was at 6.3831, down 0.1% on the day, having crossed the key psychological 6.40 level last week and touched a new three-year high of 6.3524 on Monday.<\/p>\n Analysts said that although the central bank\u2019s move – which is expected to withdraw just $20 billion worth of liquidity from the system – would slow the pace of the yuan\u2019s strengthening versus the dollar, it was unlikely to stop it completely.<\/p>\n Britain\u2019s pound hit a three-year high of $1.425 during the Asian session, helped by remarks from a Bank of England policymaker last week pointing to a rate hike next year or sooner.<\/p>\n The Canadian dollar was close to a six-year high versus the U.S. dollar, up 0.3% at 1.2036, having strengthened for four months in a row as the outlook for the domestic economy improved.<\/p>\n The U.S. ISM manufacturing survey is due at 1400 GMT, while the U.S. jobs report for May is due on Friday.<\/p>\n \u201cWe don\u2019t expect data this week to materially change market expectations about the Fed\u2019s policy stance, and the dollar\u2019s momentum may stay soft on the back of a still negative real rate narrative,\u201d wrote ING FX strategists in a note to clients.<\/p>\n