Dollar up but Asia struggles

The dollar built on the previous day’s gains on Thursday after the Federal Reserve opened the door for another US interest rate hike next month but Asian markets mostly turned lower in a holiday-filled week.

After a closely watched meeting, the US central bank gave a broadly positive view of the world’s top economy and said a recent spout of soft data, including below-par first-quarter growth, were “likely to be transitory” and that activity would pick-up over the year.

The Fed’s statement fanned expectations it will announce another rate lift next month — the second since December — as long as data points in the right direction.

Focus now turns to the release Friday of the government’s jobs creation data for April and statements from Fed boss Janet Yellen as well as other top bank officials, which could provide some forward guidance to markets.

The dollar headed towards the 113 yen mark Thursday, building on a recent rally, while it held up against the euro and pound. It also advanced against most high-yielding currencies including the Australian dollar, Indonesia’s rupiah and the Thai baht.

“Barring any unexpected shock, we should see the greenback supported until Friday, and we should expect the markets to then move on the (jobs) report, especially the wage growth component,” said Stephen Innes, senior trader at OANDA.


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Stephen Innes

Stephen Innes

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes