Dollar Holds Steady As Traders Await Fed Insights, Yen Hovers Below Intervention Level

The U.S. dollar remained steady against other major currencies on Wednesday, with traders eagerly awaiting the release of the Federal Reserve’s meeting minutes for insights into future monetary policy, Reuters reported.

Meanwhile, Australia’s dollar weakened along with the Chinese yuan due to reports of slower growth in China’s service sector, indicating a sluggish recovery in the second-largest global economy after the pandemic.

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The dollar index, which measures the currency against a basket of six major peers, showed a slight increase to 103.18. The euro slightly declined to $1.0871, while the dollar-yen rate stayed below the 145 level, which previously triggered intervention by Japanese authorities. The movement of the dollar-yen rate has generally followed the U.S. 10-year Treasury yield.

Shusuke Yamada, chief forex and rates strategist at Bank of America in Tokyo, mentioned that while there is concern about potential intervention at the current level, the market expects the yen to decline in the medium term. It is unlikely that the Ministry of Finance will intervene at the same level as last year, and intervention may not occur at all if the yen’s decline is gradual and remains below 150.

In the offshore market, the yuan experienced a slight decrease of 0.13% against the dollar, marking its first downward movement in four sessions.

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