Investing.com – The US dollar traded calmly on Wednesday ahead of the release of minutes from the Federal Reserve's latest meeting, while the British pound rose as inflation fell less than expected in April.
At 04:55 ET (08:55 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, was trading marginally higher at 104.600.
Dollar looks for direction ahead of Fed meeting minutes
The dollar is struggling to move in any meaningful way as traders await the release of the latest Federal Reserve meeting, looking for more signs on the likely path of US interest rates towards the end of the year.
Lower-than-expected consumer inflation data last week raised hopes for an interest rate cut in a reasonably short time, but a string of Fed officials continued to call for caution on policy.
The Fed governor said Tuesday that recent economic data suggests the Fed's restrictive policy is working as directed, while the head of the Atlanta Fed said the central bank needs to be cautious before its first rate cut triggers pent-up spending and sends inflation flying. “Rebounds.” “
“We should get more clarity on the FOMC's thinking in the May meeting minutes,” analysts at ING said in a note. “Although there should be evidence of growing concern about the impediments to lower inflation, Powell’s messages seem to indicate broad optimism about future price developments.”
Sterling rises after UK inflation data
In Europe, it rose 0.2% to 1.2733, after UK inflation fell less than expected in April, making a cut by the following month less likely.
The Office for National Statistics said inflation rose by 2.3% year-on-year, down sharply from a 3.2% increase in March and its lowest level since July 2021 when it reached 2.0%. But still higher than expectations of 2.1%.
“While this does not significantly change the Bank of England's course, it may prompt them to postpone interest rate cuts for another month. “Our base case remains a first rate cut in August,” ING said.
It traded 0.1% lower at 1.0849, as traders prepare for the start of an interest rate cutting cycle next month.
“European Central Bank President Christine Lagarde sounded cautiously dovish in line with most of the comments made by members of her governing board in a speech yesterday,” ING said, adding that markets expect a 24 basis point easing for next month.
ING added: “We still believe EUR/USD could fall to 1.08 in the near term, but our Q3 forecast remains at 1.10 as the Fed shifts to monetary easing and the ECB broadly matches rate cut expectations.” interest in the market.
Kiwi rises on hawkish Reserve Bank of New Zealand
In Asia, it rose 0.5% to 0.6118, with the New Zealand dollar rising sharply after it held its official policy rate steady as was widely expected, but also signaled delays in any potential interest rate cuts due to flat inflation.
It fell 0.2% to 156.43, after weak Japanese trade data – which showed a disappointing April, as well as larger than expected data – weighed on the yen.
It traded marginally higher at 7.2394, remaining close to a six-month high, as traders waited for more signals on Beijing's stimulus measures and the Chinese economy.
