Asia shares slip, dollar firm after Yellen's hike remarks

Asian shares slipped on Monday while the dollar marked fresh highs after Federal Reserve Chair Janet Yellen suggested that an interest rate hike could be around the corner.

The Fed should raise interest rates "in the coming months" if economic growth picks up and the labor market continues to improve, Yellen said on Friday.

The dollar index logged a fresh two-month high of 95.940, and was last up 0.4 percent at 95.897 (DXY).

The dollar rose 0.5 percent to 110.96 yen after earlier notching a fresh one-month higher of 111.03 yen.

The dollar also got a lift from revised U.S. gross domestic product data for the first quarter released on Friday, that showed that growth did not slow as much as first estimated.

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Forex Tips - Dollar holds steady vs. euro, yen ahead of Yellen speech

The dollar held steady against other major currencies on Friday, as investors remained cautious ahead of a speech by Federal Reserve Chair Janet Yellen due later in the day amid growing expectations for an upcoming U.S. rate hike.

EUR/USD was little changed at 1.1196.

Investors were eyeing the release of U.S. economic growth data, as well as comments by Fed Chair Janet Yellen due later Friday, for futher hints on the timing of future rate hikes by the U.S. central bank.

The greenback posted sharp gains earlier in the week amid expectations for the Fed to raise interest rates in the near term after last week’s April Fed meeting minutes flagged a possible rate hike if the economy continues to improve.

USD/JPY was steady at 109.71.

Earlier Friday, official data showed that Tokyo’s consumer price index fell by an annualized rate of 0.5% in May, compared to expectations for a 0.4% slip. Core CPI, which excludes fresh food, also declined by 0.5% last month, disappointing expectations for a 0.4% fall.

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Dollar slips lower but remains broadly supported

The dollar slipped lower against the other major currencies on Thursday, as investors locked in profits from the greenback’s recent rally to two-month highs and awaited the release of U.S. jobless claims and durable goods orders data later in the day.

USD/JPY edged down 0.17% to 109.99.

The greenback continued to be underpinned by expectations that the Federal Reserve could raise interest rates in the near term after last week’s April Fed meeting minutes flagged a possible rate hike if the economy continues to improve.

However, investors remained cautious as G7 leaders held a summit meeting in Japan, amid persistent concerns over the strength of the global economy.

The G7 leaders were expected to reiterate their previous commitment to stability in the foreign exchange market.

EUR/USD rose 0.22% to 1.1178, pulling away from Tuesday’s two-month lows of 1.1132.

The euro gained ground after Greece and its creditors reached a deal on Wednesday to unlock €10 billion in bailout funds and trigger work on debt relief, easing concerns over another euro zone debt crisis.

The dollar was steady against the pound and the Swiss franc, with GBP/USD at 1.4701 and with USD/CHF at 0.9911.

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Forex - Dollar dips but remains firm on rate hike view

The dollar eased against a basket of its peers on Wednesday, but remained supported near two-month highs as positive U.S. housing data and recent hawkish comments by Federal Reserve officials indicated that interest rates could soon rise.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, eased to 95.53, just below overnight highs of 95.66, the most since March 29.

Demand for the dollar continued to be underpinned after data on Tuesday showing that U.S. new home soared to the highest level since the start of 2008 in April.

The Commerce Department said new home sales rose by 16.6% to an annual unit rate of 619,000 last month.

The data reinforced expectations that the Fed could raise interest rates in the near term after last week’s April Fed meeting minutes flagged a possible rate hike if the economy continues to improve.

Higher rates are positive for the dollar because they make the U.S. currency more attractive to yield-seeking investors.

EUR/USD edged up to 1.1147 from Tuesday’s lows of 1.1131, the weakest level since March 16.

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“USD/JPY is probing the 55 day ma at 110.31 but will need a close above the 111.90 last reaction high to confirm that the market has based (favored)”.

“We note the TD perfected set up and 13 count on the 240 minute chart and we may see a minor set back very near term, but we look for dips to hold over 107.65”.

“The sharp drop last Friday was unexpected and the 1.4488 low was just a few pips above our 1.4485 stop-loss”.

“Unless GBP can move and stay above 1.4580 within these couple of days, a break below 1.4485 seems likely”.

“In other words, the recent high 1.4663 is likely the extent of the current bullish phase and the target of 1.4770 is not met”.

BUY GBPINR ABOVE 97.90 TGT -98-98.10-98.20 SL 97.70 BELOW CMP 97.84

SELL USDINR BELOW 67.35 TGT 67.25-67.15-67.05 SL 67.55 ABOVE CMP 67.38



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CURRENCY FUTURES TRADES STRONGER, OI DECLINES BY 0.67%

The partially convertible rupee is currently trading flat compared to its Thursday’s close at 67.36. The rupee opened at 67.38 and touched day’s high of 67.4050 and low of 67.3150.

The May currency future was trading at 67.4425 with a spread of 0.0050 and a volume of 370515. The contract opened weaker at 67.52 compared to its previous closing of 67.4550. 

The open interest (OI) stood at 1,558,878 down by 0.67% compared to its previous close of 1,569,406.

The rupee had closed at 67.36 on Thursday, while the Reserve Bank of India’s (RBI) reference rate stood at 67.2307.

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