The dollar index, which gauges the currency versus six rivals, fell slightly to 103.81 but is still not far from the high of 104.49 reached at the beginning of the week for the first time since December 2002.
The euro climbed a touch to $1.05405 but has traded chiefly sideways since plumbing, a five-year low at $1.04695 at the end of last month.
The yen resumed getting some respite from a pause in the recent relentless rise in benchmark U.S. Treasury yields, trading little changed at 130.36 per dollar after falling to a more than the two-decade low of 131.35 on Monday.
Investors will be closely monitoring the April U.S. consumer price index reading later on Wednesday for any indications inflation may be beginning to cool, with expectations calling for an 8.1% annual increase compared with an 8.5% rise registered in March.
Fed raising benchmark
After the Fed raised its benchmark overnight interest rate by 50 basis points last week, the most significant hike in 22 years, investors have been trying to estimate how aggressive the central bank will be.
Markets are priced for another hike of at least 50 basis points at the central bank’s June meeting, as CME’s FedWatch Tool stated.
He noted that the euro “remains heavy,” exceeding $1.05, and a strong CPI print could push the Australian dollar under $0.69.
The Aussie rose 0.25% to $0.69595 on Wednesday after touching a 22-month trough of $0.6911 earlier.
New Zealand’s kiwi dollar earned 0.22% to $0.63075 but remained not far from the previous session’s nearly two-year low of $0.6277.
CBA sees the possibility for a further 5 U.S. cent drop in both Antipodean currencies if strict COVID-19 lockdowns continue for several more months in key trade partner China. Nevertheless, fundamentals point to “large gains by year-end” for Aussie and Kiwis after the ending of the lockdown.