Australian business investment fell unexpectedly in the first quarter

• Minutes from the Federal Reserve's May meeting confirmed the potential for a pause in rate hikes
• Sterling was flat against the dollar and rose against the euro yesterday
• The Canadian dollar edged higher yesterday, recovering from its lowest level in nearly a week

Forex market 

The dollar hovered near a one-month low today as minutes from the Federal Reserve's May meeting confirmed the potential for a pause in rate hikes after likely further increases in June and July. The dollar index - which measures the currency against six major peers - edged 0.1% higher to 102.15 as a decline in Asian equities fostered demand for safe havens like the greenback. 

However, the index has mostly been consolidating around 102 after a short-lived bounce to 102.45 immediately following Wednesday's release of the minutes. Analysts said there was nothing to suggest a further ramp-up of the Federal Open Market Committee's already hawkish stance. Wall Street rallied overnight on that outlook, while long-term Treasury yields held steady. Atlanta Fed President Raphael Bostic had already suggested earlier this week that a pause might be the best course of action in September to monitor the effects on the economy following two more 50-basis-point hikes in June and July. 

Economic Calendar

The dollar index reached a nearly two-decade peak above 105 mid-month. Still, signs that aggressive Fed action may already be slowing economic growth have prompted traders to scale back tightening bets, with Treasury yields also dropping from multiyear highs. The 10-year Treasury yield tracked sideways in Tokyo at 2.75%, continuing its consolidation around that level this week. A soft DXY backdrop is forming although it's still too early to call a long-term DXY peak. The dollar added 0.08% to 127.425 yen, while the euro was about flat at $1.0679. 

Sterling slipped 0.17% to $1.25615. The risk-sensitive Aussie sank 0.25% to $0.70695. The New Zealand dollar dropped 0.31% to $0.6458, after shedding most of the gains following Wednesday's hawkish Reserve Bank of New Zealand meeting outcome, which had lifted it to a three-week top of $0.6514. The dollar's safe-haven appeal should keep it bid going forward.

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Euro-EUR

The single currency gained as the dollar hovered near a one-month low today as minutes from the Federal Reserve's May meeting confirmed the potential for a pause in rate hikes after likely further increases in June and July. There was nothing to suggest a further ramp up of the Federal Open Market Committee's already hawkish stance. Overall, the EUR/USD traded with a low of 1.0469 and a high of 1.0563 before closing the day around 1.0497 in the New York session.

Japanese Yen-JPY

The Japanese Yen steadied as the dollar index which measures the currency against six major peers edged 0.1% higher to 102.15 as a decline in Asian equities fostered demand for safe havens like the greenback. However, the index has mostly been consolidating around 102 after a short-lived bounce following a release of the minutes. Overall, the USD/JPY traded with a low of 128.32 and a high of 131.23 before closing the day around 130.82 in the U.S session.

British Pound-GBP

The British Pound was flat against the dollar and rose against the euro, having briefly lost ground against both currencies following the publication of a report detailing COVID lockdown-breaching parties at the office of Britain's prime minister. A failure of leadership was to blame for a culture that led to the alcohol-fueled gatherings being held. Overall, the GBP/USD traded with a low of 1.2409 and a high of 1.2568 before closing the day at 1.2455 in the New York session.

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Canadian Dollar-CAD

The Canadian Dollar edged higher against its U.S counterpart yesterday, recovering from its lowest level in nearly a week, as equity markets rallied after the U.S Federal Reserve released minutes of its latest policy meeting. U.S crude oil futures settled 0.5% higher at $110.33 a barrel, buoyed by tight supplies. Overall, USD/CAD traded with a low of 1.2788 and a high of 1.2877 before closing the day at 1.2805 in the New York session.

Australian Dollar-AUD

The Australian Dollar traded lower as Australian business investment fell unexpectedly in the first quarter as floods and bottlenecks hit building work, though firms sharply lifted plans for spending in the year ahead in a boost to the economic outlook. Data from the Australian Bureau of Statistics out on Thursday showed private capital spending dipped a real 0.9% in the March quarter. Overall, AUD/USD traded with a low of 0.6826 and a high of 0.6951 before closing the day at 0.6853 in the New York session.

Euro-Yen EUR/JPY

EUR/JPY is trading below 14, 50 and 100 days moving average. Fast stochastic is giving a bearish tone and MACD is also issuing a bearish stance. The Relative Strength Index is above 35 and lies below the neutral zone. In general, the pair has gained 1.25%.

Sterling-Yen GBP/JPY

Currently, GBP/JPY is trading below 14, 50 and 100 days moving average. Fast stochastic is issuing a bearish tone and MACD is also indicating a bearish stance. The Relative Strength Index is above 33 reading and lies below the neutral zone. On the whole, the pair has gained 1.16%.

Aussie-Yen AUD/JPY

Currently, the cross is trading above 14, 50 and 100 days moving average. Fast stochastic is giving a bearish tone and MACD is also indicating a bearish stance. The Relative Strength Index is above 36 reading and lies below the neutral region. In general, the pair has gained 1.45%.

Euro-Sterling EUR/GBP

This cross is currently trading above 14, 50 and below 100 days moving average. Fast stochastic is indicating a bullish tone and MACD is also issuing a bullish signal. The Relative Strength Index is above 58 and lies above the neutral region. Overall, the pair has gained 0.12%.

Sterling-Swiss GBP/CHF

This cross is trading below 14, 50 and 100 days moving average. Fast stochastic is issuing a bearish stance and MACD is also indicating a bearish tone. The Relative Strength Index is above 50 and lies below the neutral region. In general, the pair has lost 0.42%.

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