The U.S. dollar received support on Thursday, May 27, from the belief that the Federal Reserve is slowly but steadily moving toward discussions regarding tightening monetary policy, while the yuan reached its highest level in three years. Investors are sharply reducing their dollar purchases in anticipation of an increase in the trade deficit in the U.S. current account as the world recovers from the pandemic. However, merely suggesting a gradual reduction in the pace of the Fed's asset purchases is enough to halt further selling. Following a surprising spike in consumer prices in April, markets are also highly concerned ahead of the jobs and GDP data set to be released today, as well as inflation data tomorrow, Friday.
Major currencies remained largely stable during the Asian trading session, with the euro around 1.2190 U.S. dollars, while the Japanese yen and the British pound dipped slightly to reach their lowest levels in a week. The strength of the dollar also halted the rise of the New Zealand dollar, which recorded 0.7286 dollars after hints from the Reserve Bank of New Zealand about raising interest rates in 2022, which had pushed the currency to 0.7316 dollars on Wednesday. The Australian dollar dropped to 0.7732 dollars. In contrast, the yuan went against the trend, rising to 6.7399 to the dollar in offshore trading. The dollar index maintained its gains from yesterday, stabilizing at 90.055. Meanwhile, cryptocurrencies declined but did not erase much of the gains achieved after their downturn last week.
