Dollar steady ahead of Fed minutes; the yen is hovering below the intervention zone

By Kevin Buckland

TOKYO (Reuters) – The dollar drifted toward the middle of its three-week range against major peers on Wednesday, as traders eagerly awaited the release of the minutes of the Federal Reserve’s latest meeting for further guidance. clues on the way to monetary policy.

The dollar index – which measures the currency against a basket of six major peers including the euro and the yen – was little changed at 103.02, after fluctuating between 103.75 and 102.75 since early June. .

Europe’s common currency edged up 0.1% to $1.0886, recouping some of its 0.34% decline overnight.

The dollar hovered about half a yen below the 145 level that spurred intervention from Japanese authorities last fall, after briefly hitting 145.07 last week for the first time since November.

Movements in the dollar-yen rate broadly followed the US 10-year Treasury yield, which fell as low as 3.841% in Tokyo after trading resumed after the July 4 Independence Day holiday.

“Obviously, at this level, the market is paying attention to the potential risk of intervention, but as a medium-term trend, the market is looking for further declines in the yen,” said Shusuke Yamada, chief forex strategist and rates at Bank of America in Tokyo.

“We don’t see a very high likelihood of the Department of Finance intervening at the same level as last year – and if the move isn’t quick, below 150, we might not see any intervention at all. “

The Aussie dollar was flat at $0.6690, retaining the 0.32% advance from the previous day.

On Tuesday, the Aussie initially fell after the Reserve Bank of Australia left interest rates unchanged, but quickly returned to gains as traders bet the tightening cycle will resume with one or even two hikes additional on the cards.

A stronger Chinese yuan, which boosted bets on Beijing’s stimulus to support a fragile economic recovery in Australia’s main trading partner, also supported the Antipodean currency.

The yuan was little changed at 7.231 to the dollar in offshore trading, after rising 0.3% on Tuesday as it continued its rebound from last week’s eight-month low of 7.2857.

(Reporting by Kevin Buckland; Editing by Shri Navaratnam)

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