The dollar was slightly down as the Asian trading session was coming to a halt. The New Zealand dollar recovered after initially dropping as the country’s current account deficit as a proportion of GDP widened to its most in the first quarter of the year. Other data during the Asian session pertained to China.
Looking at the dollar index, a broad measure of the US currency’s strength, it was down 0.1% and below the 97 level with the close of Asian markets trading. Against the yen, the greenback was flat, marginally above the 110-yen level. Euro/dollar was slightly up at 1.1219. Pound/dollar was also up, eyeing the 1.28 level.
The Federal Reserve will be completing its two-day meeting today during which it is expected to announce a 25 bps interest rate rise for its benchmark rate to reach a target range of 1 to 1.25%. A press conference by Fed Chair Janet Yellen will follow after the rate decision announcement. Investors will be looking for guidance on the future path of rate hikes as well as the Fed’s plan to unwind its mammoth-size balance sheet. Should Fed officials communicate a dovish outlook, then the greenback is expected to weaken. US inflation data later in the day will also attract attention.
Turning to New Zealand, the kiwi suffered losses versus its US counterpart as the country’s current account deficit reached NZ$8.13 billion, its most as a percentage of GDP. Kiwi/dollar fell to 0.7198 at its lowest but later recovered to reach a three-and-a-half-month high of 0.7239.
In terms of Chinese data, industrial output numbers showed output increasing 6.5% year-on-year in May, beating expectations of a 6.3% rise and coinciding with April’s respective rate. Retail sales also came above forecasts projecting a 10.6% year-on-year growth to record a rise by 10.7%. Investment didn’t expand as strongly as expected though, growing by 8.6% on an annual basis, negatively comparing to the expected 8.8% and April’s 8.9%. Dollar/yuan was up and close to the day’s high of 6.79 with the close of Asian markets.
Moving from forex markets to commodities, gold was last up two-tenths of a percent, trading at $1268 an ounce, ahead of investor cautiousness regarding the Fed meeting. WTI and Brent crude were both down 0.9% and 0.8%, at $46.04 and $48.35 a barrel respectively. The Energy Information Administration’s (EIA) weekly report on US crude oil inventories will be released later in the day.