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Title: Dollar Up Ahead of the Fed Minutes Release

May 25, 2022 01:20AM ET

By: AnalysisWatch

The dollar rose Wednesday morning in Asia as investors awaited the minutes of the latest US Federal Reserve meeting.

The US dollar index, which tracks the greenback against a basket of other currencies, rose 0.09% to 101.968 at 13:07 ET

The USD/JPY pair rose 0.11 percent to 126.96.

The AUD/USD pair rose 0.15 percent to 0.7114 and the NZD/USD pair gained 0.67 percent to 0.6507. The Reserve Bank of New Zealand raised its interest rate from 1.5% to 2.0%, as predicted by

In addition, the bank provided more aggressive guidance on its future policy path, stating that a larger, earlier increase could reduce the risk of persistently high inflation.

The USD/CNY gained 0.26% to 6.6708 and the GBP/USD rose 0.05% to 1.2535.

The euro fell 0.22% to $1.07105, but remained close to Tuesday's high of $1.0748, a level not seen since 25 April. Comments by European Central Bank President Christine Lagarde that eurozone interest rates are likely to be in positive territory by the end of the third quarter gave the euro a boost.

Lagarde's comments implied an increase of at least 50 basis points in the deposit rate and triggered speculation of larger increases for the summer.

The US ten-year Treasury yield rose to 2.7631%, after falling to a near one-month low of 2.718% overnight.

Investors kept an eye on the monetary policy outlook, with fears of a potential recession caused by the tightening of monetary policies. The minutes of the Fed's latest meeting will be released later in the day and investors await further clues on the continuation of monetary tightening.

However, Fed Bank of Atlanta President Raphael Bostic, one of the central bank's dovish policymakers, warned in an essay published on Tuesday that raising rates too sharply could create "significant economic dislocation" and urged the Fed to tighten policy cautiously and avoid "recklessness".

In Asia Pacific, the Bank of Korea will publish its interest rate decision on Thursday.

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