© Reuters
Investing.com – The US dollar was steady in early European hours on Tuesday in holiday-influenced trade, while the Australian dollar eased after the Reserve Bank kept interest rates steady at its latest policy-setting meeting.
At 03:00 ET (07:00 GMT), the dollar, which measures the greenback against a basket of six other currencies, was trading slightly lower at 102.612.
The dollar was stuck in narrow ranges affected by the holidays
The dollar is likely to trade in narrow ranges on Tuesday as US markets close as the country celebrates Independence Day, especially as the week ends with a switch that could affect the next move by the Federal Reserve.
The dollar weakened on Monday, after the release of disappointing manufacturing data, with the Institute for Supply Management dropping to 46.0 from 46.9 in May, the lowest reading since May 2020.
The ISM survey was consistent with the economy in recession, but that may not be enough to prevent the Fed from restarting its tightening cycle later this month if Friday’s official employment report indicates the labor market remains healthy given inflation remains higher. from the target.
The RBA is standing firm but not ruling out further hikes
It rose 0.1% to 0.6678 after holding the cash rate at an 11-year high of 4.10%, saying it wanted more time to assess the impact of the 400 basis point hike since May last year.
However, the central bank reiterated its warning that further tightening may be needed because “inflation is still very high and will be for some time yet.”
German exports decline in May
It traded largely unchanged at 1.0910, even with the low in May, indicating a tough trading environment for the manufacturing powerhouse in Europe.
With that said, the bank is likely to continue its historic series of interest rate increases, with another likely hike later this month.
“The way I see it, we still have a way to go,” Governing Council member Joachim Nagel, chairman of Germany’s Bundesbank, said in a speech in Frankfurt on Monday.
Elsewhere, it rose 0.1% to 1.2705, with rate hikes likely to continue as the country remained at 8.7% in May, the highest of any major developed economy.
The yen fell 0.2% to 144.39, with the yen hovering around seven-month lows as markets continued to monitor any potential government intervention in the currency markets.
Japanese Finance Minister Shunichi Suzuki said on Friday that Japan will take appropriate steps in response to the excessive weakness of the yen.