By V. Phani Kumar, MarketWatch
HONG KONG (MarketWatch) — The U.S. dollar rose further against several major rivals Wednesday after Federal Reserve minutes showed further asset purchases unlikely, but fell against the yen on risk-aversion as global equity markets dropped.
The ICE dollar index DXY +0.15% , a gauge of the greenback’s performance against a basket of six major rivals, rose to 79.506 during Asian business hours from 79.410 late in North American trade Tuesday.
The euro EURUSD -0.27% was changing hands at $1.3189, compared with $1.3231 Tuesday, when the common currency suffered its biggest percentage drop since March 9.
The British pound GBPUSD -0.15% declined to $1.589, from $1.5901, easing further after a British Chambers of Commerce report said the U.K., although growing, will need to provide more support to the private sector.
“Part of the fixed-income community has been caught on the wrong foot, assuming rates were moving back lower from their peak,” Sebastien Galy, a foreign-exchange strategist at Societe Generale, wrote to clients, referring to minutes of the Fed’s last meeting.
“Presumably there is very little new for anyone concerned [about Spain’s debt troubles]. Nonetheless, it fits into expectations that the euro should continue to slide,” he said.
The minutes suggested there was apparently no discussion at the March meeting of any new form of quantitative easing by the Fed. Read more about the Fed meeting’s minutes.
The minutes led to a decline for stocks Tuesday on Wall Street, which in turn aided a fall for Asian equities Wednesday and prompted investor caution. Read Asia Markets.
Reflecting risk aversion, the dollar USDJPY -0.20% declined against the Japanese yen and was buying ÂĄ82.72 compared with ÂĄ82.87 late Tuesday.
Among other regional currencies, the Australian dollar AUDUSD -0.50% fell after the nation posted a surprise trade deficit, with the unit at $1.0273 from $1.0305 just ahead of the data Wednesday morning. Read more about Australia’s trade deficit.
“While weather distorted, today’s trade data add to the view of an economy that is struggling at a sub-trend pace. Barring a major upside surprise for [first-quarter consumer price inflation] on April 24, we expect the Reserve Bank of Australia to cut the cash rate in May,” Royal Bank of Canada strategist Su-Lin Ong wrote in emailed comments after the data.
Varahabhotla Phani Kumar is a reporter in MarketWatch's Hong Kong bureau.
