The dollar softened in Asia Wednesday on expectations that the US Federal Reserve will delay an interest rate hike following fresh data pointing to slowing growth in the world’s biggest economy, analysts said.
The greenback fell to 118.83 yen in mid-morning trade from 118.88 yen in New York and sharply lower than the 119.10 yen earlier Tuesday in Asia.
And while the euro edged down to $1.0969 and $130.33 from $1.0981 and 130.55 yen in US trade, it is well up from $1.0880 and 129.54 yen earlier Tuesday.
The Fed’s policy-setting committee ends a two-day meeting later Wednesday and traders are betting on a rate hike being put back, while also looking for some guidance about its intentions later in the year.
The central bank had previously signalled a possible hike in June, but analysts now expect it in September at the earliest following a spate of soft readings.
The latest came Tuesday as the Conference Board reported its index of consumer confidence tumbled in March, instead of rising as expected. Consumers reported growing pessimism about current and short-term US economic conditions.
‘Expectations for tonight’s … decision have now changed significantly, with traders now expecting interest rate lift-off to be pushed out from June to September at least, sending the US dollar into reverse,’ said Nicholas Teo, market analyst at CMC Markets in Singapore.
‘The oil crash, slower overseas economies and a higher (dollar) have made it increasingly difficult for the US to defy gravity,’ he added.
Also in focus is the government’s first estimate of US first-quarter economic growth, with analysts predicting a 1.0 percent rate, down from 2.2 percent in the previous three months.
Source : AFP