# Dollar edges higher as market awaits clues from U.S. Fed
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2021-07-06
Category: TRADING
Category URL: https://financedigest.com/category/trading
Meta Title: Dollar gains post-Independence Day as traders await Fed
Meta Description: Discover why the dollar rose against other currencies after the U.S. Independence Day weekend & ahead of the Fed's June meeting minutes release.
URL: https://financedigest.com/dollar-edges-higher-as-market-awaits-clues-from-u-s-fedhtml

![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2021-07-06t113824z1lynxnpeh650k6rtroptp4business-currency-1736838221133-compressed.jpg)

By John McCrank

NEW YORK (Reuters) – The dollar gained against a basket of peer currencies on Tuesday following the U.S. Independence Day long weekend as traders positioned themselves [ahead of the release of the minutes](https://www.financedigest.com/energy-stocks-boost-european-shares-ahead-of-ecb-minutes.html "Energy stocks boost European shares ahead of ECB minutes") from the U.S. Federal Reserve’s pivotal June meeting.

[Market participants will be looking for clues as to when the Fed](https://www.financedigest.com/markets-start-signalling-fed-may-be-going-too-far-amundi.html "Markets start signalling Fed may be going too far – Amundi") will begin to taper its pandemic-induced bond-buying spree amid a recovering economy, when minutes of the June meeting are published on Wednesday.

Investors are bracing themselves for possibly more of a hawkish spin from these [minutes and that should provide some upside here for the dollar,”](https://www.financedigest.com/dollar-jumps-euro-dips-before-fed-minutes.html "Dollar jumps, euro dips before Fed minutes") said Edward Moya, a senior market analyst at OANDA.

At 3 p.m. Eastern time, the dollar index was up 0.328% at 92.550.

The greenback’s move came even as U.S. [Treasury yields](https://www.financedigest.com/wall-street-stocks-power-higher-as-treasury-yields-and-dollar-ease.html "Wall Street stocks power higher as Treasury yields and dollar ease") fell after data signaled that growth in the service sector had slowed, with the benchmark 10-year note on track for its longest streak of declines in 16 months.

[Data from the Institute of Supply Management](https://www.financedigest.com/use-case-centric-data-management-why-it-is-the-future-of-data-management-for-financial-institutions.html "Use Case centric data management – Why it is the future of data management for financial institutions") showed that U.S. [services industry](https://www.financedigest.com/the-push-and-pull-of-identity-security-adoption-in-the-financial-services-industry.html "The push and pull of identity security adoption in the financial services industry") activity moderated in June, likely restrained by labor and raw material shortages, resulting in unfinished work continuing to pile up. The ISM [survey’s measure of service](https://www.financedigest.com/fiserv-survey-shows-digital-services-key-to-customer-loyalty.html "Fiserv Survey Shows Digital Services Key to Customer Loyalty") employment fell to a reading of 49.3 in June from 55.3 in May.

That followed a mixed U.S. jobs report on Friday, which caused the [dollar to retreat](https://www.financedigest.com/dollar-retreats-headed-for-biggest-weekly-loss-since-mid-january-bitcoin-down.html "Dollar retreats, headed for biggest weekly loss since mid-January; bitcoin down") from a three-month high.

“Even though the developments in the U.S. economy, as far as the statistics go, are not going to prompt the [Fed into any fast rate](https://www.financedigest.com/oil-up-2-as-dollar-weakens-on-small-us-fed-rate-hike.html "Oil up 2% as dollar weakens on small US Fed rate hike") increases, you’re still ahead and way ahead of what’s going on in its competitors,” said Joseph Trevisani, senior analyst at FXStreet.com.

Disappointing [data out of Europe sent the euro towards a three-month low against the dollar](https://www.financedigest.com/dollar-dips-ahead-of-inflation-data-later-this-week.html "Dollar dips ahead of inflation data later this week").

Investor sentiment in Germany, the euro zone’s biggest economy, remains at a high level but fell sharply in July, the ZEW economic research institute reported, while [data showed orders for German-made goods posted their sharpest slump](https://www.financedigest.com/oil-slumps-on-economic-data-stronger-u-s-dollar.html "Oil slumps on economic data, stronger U.S. dollar") in May since the first lockdown in 2020.

The [data dented the euro](https://www.financedigest.com/dollar-trims-gains-vs-euro-after-u-s-inflation-data.html "Dollar trims gains vs euro after U.S. inflation data"), which was down 0.37% at $1.18235 against the greenback. It fell to an early April low of $1.1807 last week.

European [Central Bank](https://www.financedigest.com/dollar-skulks-at-eight-month-low-central-bank-meetings-in-focus.html "Dollar skulks at eight-month low, central bank meetings in focus") policymakers are in the middle of debating a new strategy, with many now backing the notion of letting inflation surpass 2% for a while after it lagged below that level for most of the past decade.

Sterling was down 0.34% against the [dollar at $1.38005 after having hit](https://www.financedigest.com/european-shares-hit-nine-month-high-dollar-wobbles-after-powell-remarks.html "European shares hit nine month high, dollar wobbles after Powell remarks") a one-week high of $1.3888, with markets looking forward to England becoming the first major country to formally start living with the coronavirus by dropping COVID-related curbs in two weeks’ time. \[GBP/\]

The New Zealand dollar eased 0.27% to $0.70135, erasing gains made earlier in the day as [traders wagered a rate hike](https://www.financedigest.com/dollar-hits-one-month-high-against-yen-as-traders-bet-on-fed-rate-hike.html "Dollar hits one-month high against yen as traders bet on Fed rate hike") could come as early as November following a strikingly strong survey of business conditions.

The Aussie slid 0.38% to $0.74965, having risen as much as 1.2% earlier after the Reserve Bank of Australia pared bond purchases and tweaked its [rates outlook to open the door just a sliver for the possibility of hikes](https://www.financedigest.com/sp-warns-of-possible-economic-blow-hit-to-japan-inc-from-boj-rate-hike.html "S&P warns of possible economic blow, hit to Japan Inc from BOJ rate hike") before 2024.

That decision puts the RBA in a small but growing club of [central banks](https://www.financedigest.com/analysis-china-central-bank-under-pressure-to-ease-is-hemmed-in-by-inflation-fed-jitters.html "Analysis-China central bank, under pressure to ease, is hemmed-in by inflation, Fed jitters") stepping back from massive pandemic-era stimulus. (Graphic: FX returns, https://fingfx.thomsonreuters.com/gfx/mkt/jbyvrzeoqve/FX%20returns.JPG)

(Reporting by John McCrank; additional reporting by Julien Ponthus; editing by Jacqueline Wong, Mark Heinrich, William Maclean and Sonya Hepinstall)


---
This blog is powered by Superblog. Visit https://superblog.ai to know more.
---