Wednesday, May 25, 2016

Forex - Dollar dips but remains firm on rate hike view

© Reuters. Dollar eases but continues to remain firm on Fed rate hike expectations© Reuters. Dollar eases but continues to remain firm on Fed rate hike expectations

Investing.com - 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 , 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 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.

edged up to 1.1147 from Tuesday's lows of 1.1131, the weakest level since March 16.

In the euro zone, 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 yen, with at 110.03.

The pound gained ground, rising to almost one-week highs, with up 0.12% to 1.4651 as uncertainty over eased.

The Australian dollar also pushed higher, with climbing 0.18% at 0.7193, recovering from the three-month lows of 0.7144 struck overnight amid speculation that the country's central bank could cut interest rates again in the coming months.

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