By Gina Lee
Investing.com – The dollar was higher Tuesday morning in Asia as it returned from a nearly five-month low. Investors continued to bet that the US Federal Reserve will change its stimulus measures sooner than expected after the release of positive economic data on Tuesday.
The US dollar index that tracks the greenback against a basket of other currencies edged up 0.11% to 89.920 at 1:28 am ET (5:28 GMT).
USD / JPY was up 0.25% to 109.72.
AUD / USD edged down 0.09% to 0.7747 after Australia issued a Better than expected gross domestic product early in the day. GDP grew by 1.8% quarter after quarter and 1.1% from year to year for the first quarter of 2021. NZD / USD edged down 0.10% to 0.7248.
USD / CNY was up 0.06% to 6.3832. Investors continue to watch the recent rise in the yuan after the People’s Bank of China tightened banks’ foreign exchange reserve requirements to dampen the appreciation of the yuan. The restrictions pushed the offshore yuan lower from its three-year high of 6.3526 touched on Monday.
GBP / USD rose 0.01% to 0.4148, with Governor of the Bank of England Andrew Bailey due to talk later in the day.
“The direction of the dollar is definitely at the center of our concerns,” Shinichiro Kadota, senior currency strategist at Barclays (LON: BARC) in Tokyo, told Reuters, adding that “the market is divided in his opinion.”
Some U.S. Federal Reserve officials insisted the price pressure would be temporary, while some investors remained concerned that potential soaring inflation would eventually force the central bank to change its current monetary policy sooner. provided that.
“Even if inflation continues to exceed, I think the Fed will continue to say it’s temporary, but the market won’t know for sure until the fall, so we’re a little stuck in that uncertainty,” he said. said Kadota.
In the United States, data released on Tuesday indicated that IInstitute of Supply Management (ISM) Manufacturing Purchasing Managers Index (PMI) rose 61.2 in May, driven by increased demand amid reopening of businesses. That’s better than the 60.9 figure in the forecast prepared by invest.com and April’s 60.7 reading. However, the data also indicated supply shortages and labor constraints.
Investors are now waiting for new US data, including non-farm wages, expected Friday for clues to the economic outlook. Its much lower than expected reading in April led the dollar to collapse 0.7% on May 7.