By Gina Lee
Investing.com – The dollar was down on Wednesday morning in Asia but was near a five-year high against the yen. Investors await the U.S. Federal Reserve’s latest policy decision, with the conflict in Ukraine and the surging number of COVID-19 cases in China also on their radars.
The that tracks the greenback against a basket of other currencies was down 0.21% to 98.860 by 11:38 PM ET (3:38 AM GMT).
The pair inched down 0.01% to 118.27, the strongest level since January 2017. Japanese trade data released earlier in the day showed that grew 19.1% year-on-year and grew 34% year-on-year in February 2022. The was –JPY668.3 billion ($5.65 billion) and the was –JPY1.03 trillion.
The pair inched up 0.08% to 0.7202, after falling to $0.71650 during the previous session for the first time since Feb. 28. The pair inched down 0.03% to 0.6767.
The pair edged down 0.17% to 6.3598, while the pair edged up 0.12% to 1.3053.
The euro continued to crawl back up from its plunge to a nearly 22-month low earlier in the month. The single currency edged up 0.14% higher to $1.09695, clawing up from a low of $1.08060 hit on Mar. 7.
U.S. Treasury yields climbed ahead of the Fed’s policy decision, which will be handed down later in the day. This gave the dollar a boost vis-a-vis the yen, with investors fully priced for the first interest rate hike in three years and giving 13% odds of a half-percentage point increase.
The Bank of England will hand down its on Thursday, with the Bank of Japan’s following a day later.
The Australian dollar also came under pressure, as its top trading partner China deals with its latest COVID-19 outbreak. Numbers more than doubled to a two-year high on Tuesday, and areas such as the southern city of Shenzhen and Jilin province are currently under lockdown.
This kept the dollar index around the 99 mark after it hit a high of 99.415 at the beginning of the previous week. The dollar was also near its highest level this month to its riskier Australian counterpart, with commodity prices retreating from multi-year peaks as Russia and Ukraine continue talks that could lead to a ceasefire. Russia invaded its neighbor on Feb. 24.
“Whether it’s forlorn or otherwise, there does seem to be some enduring optimism coming from the fact that Russia and the Ukraine are still talking,” helping the euro to stabilize, National Australia Bank (OTC:) head of FX strategy Ray Attrill told Reuters.
For the greenback, “the bigger question will be that there is a lot of historical evidence that the dollar peaks as soon as the Fed commences the tightening cycle, so there’s a lot of interest in whether what the Fed does turns out to be something of a watershed in terms of a peak,” with the dollar index topping out around 100, he added.
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