By Rae Wee
SINGAPORE (Reuters) -The dollar was firm on Tuesday while the yen struggled at the weaker end of the 156 level, although trading remained largely within range as investors generally stuck to their views on expected timing and size of Federal Reserve interest rate cuts this year.
Cryptocurrencies rose, led by a rise in ether due to growing expectations of an upcoming approval of spot ether exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission (SEC).
Against the yen, the dollar rose 0.11% to 156.41 in Asia.
The yen has traded in a tight range over the past few sessions as fears of further intervention from Japanese authorities kept traders from pushing the currency to new lows. However, the still large interest rate differentials between the US and Japan maintained the appeal of the yen as a financing currency.
Elsewhere, the euro edged 0.02% higher to $1.0859, while sterling similarly rose 0.04% to $1.27115.
With little on the U.S. economic data calendar this week to determine the direction of currency moves, investors are turning their attention to a slew of Fed speakers for clues about the U.S. interest rate outlook and how soon an easing cycle could begin.
Several officials on Monday called for continued policy caution, even after last week’s data showed a welcome easing of consumer price pressures in April.
“I think all the comments from different officials will deliver more of the same messages, and the main message will be that the FOMC will continue a patient approach to rate cuts,” said Carol Kong, currency strategist at the Commonwealth Bank of Australia. OTC :).
Yet the Fed’s cautious rhetoric has so far done little to significantly change market prices for rate cuts, with investors betting on two cuts this year, starting in September.
Against a basket of currencies, the dollar was steady at 104.62.
The New Zealand dollar fell 0.09% to $0.61005, while it fell 0.14% to $0.6658.
Minutes from the Reserve Bank of Australia’s May meeting on Tuesday showed the central bank decided to maintain interest rates in part to avoid an “excessive refinement” of policy, but judged a hike could be necessary if the inflation forecasts would prove too optimistic.
In the crypto space, ether rose more than 5% to a more than one-month high of $3,720.80 after surging nearly 14% in the previous session – the biggest daily percentage gain since November 2022.
broke above the USD 70,000 level and last traded 2% higher at USD 70,980.
Analysts said the latest crypto rally came amid speculation that an approval of spot ether ETFs by the US SEC could be imminent, following in the footsteps of the listing of bitcoin ETFs earlier this year.
“It has absolutely flown,” said Tony Sycamore, market analyst at IG. “I think part of it has to do with that speculation, but also with last week’s core (US) inflation data, which has boosted risk sentiment and obviously put rate cuts back into play.
“With the SEC approval in January and then the banning of the halving, there was a little bit of a catalyst lacking in terms of what the next major driver for crypto would be, and I think it was always going to come back to macro -economy. And the macro has been really good since last Wednesday.”
