Dollar holds ahead of Fed minutes, NZ dollar falls after interest rate cut Reuters

By Brigid Riley

TOKYO (Reuters) – The dollar moved higher on Wednesday, providing some relief to the yen and other major currencies after surging to a seven-week high last week as investors paused to gauge the interest rate outlook for the United States .

The New Zealand dollar fell to its lowest level since August 19 at $0.6096 after the Reserve Bank of New Zealand (RBNZ) cut interest rates by 50 basis points.

Ultima was last down 0.55% at $0.61035.

Most economists in a Reuters poll last week had predicted a big cut of half a percentage point. The central bank began an easing cycle in August, trying to cut rates from 15-year highs.

The US data calendar this week is relatively light, providing a respite after a strong jobs report on Friday sent the dollar lower and markets reassessed the expected scale of future interest rate cuts.

On Wednesday, investors will get the minutes of the Fed’s September meeting, which will show discussions of what at the time appeared to be a deteriorating labor market that ended with all but one policymaker accepting a discount of 50 basis points.

But bets on another jumbo cut in November were off after the latest non-farm payrolls data pointed to a more resilient picture.

Markets now have about an 85 percent chance of a quarter-basis point rate cut, as well as a slim chance the Federal Reserve will leave rates unchanged, CME’s FedWatch tool showed.

Thursday’s September Consumer Price Index report will be the headliner this week.

“This week’s US inflation data and upcoming corporate earnings will be key to supporting the US dollar’s recovery and should reinforce the narrative of US exceptionalism,” analysts at Westpac IQ wrote in a note.

which measures the greenback against a basket of currencies, was steady at 102.490, not far from Friday’s seven-week high of 102.69.

As the dollar settled, the euro settled around $1.0977, while the pound was at $1.3101, close to a more than three-week low of $1.30595 hit on Monday.

USD/JPY traded in a tight range, last hovering around 148.28 yen, after touching a seven-week high of 149.10 on Monday.

Elsewhere, the Australian dollar licked its wounds, slipping to $0.6715 on Tuesday, its lowest level since September 16, after minutes from the nation’s last central bank meeting turned flat. Last traded not far from this low, down 0.08% to $0.67415.

Investors remain focused on China after a volatile day in China and Hong Kong markets in the previous session.

Beijing said on Tuesday it was “fully confident” it would hit its full-year growth target but refrained from introducing stronger fiscal measures, disappointing investors who had been counting on more support from factors decision to get the economy back on track.

It stabilized around 7.0695 per dollar.