By Kevin Buckland
TOKYO (Reuters) – The U.S. dollar drifted near the middle of its range of the past three weeks against major peers on Wednesday, as traders looked ahead to the release of minutes from the Federal Reserve’s latest meeting for clues about the path for monetary policy.
Australia’s dollar weakened with the after data showed China’s services activity expanded at the slowest pace in five months in June, the latest evidence of a sputtering post-pandemic recovery in the world’s second-largest economy.
The – which measures the currency against a basket of six major peers, including the euro and yen – rose 0.11% to 103.18, after tracking between 103.75 and 102.75 since early June.
Europe’s shared currency edged 0.08% lower to $1.0871, adding to its 0.34% overnight decline.
The dollar hovered around 144.62 yen, below the 145 level that spurred intervention by Japanese authorities last autumn. The greenback had last week briefly popped as high as 145.07 for the first time since November.
Moves in the dollar-yen rate have broadly tracked the , which dipped as low as 3.841% in Tokyo after resuming trade following the July 4th Independence Day holiday.
“Obviously at this level, the market is paying attention to the potential risk of intervention, but as a medium-term trend, the market is looking for further downside for the yen,” said Shusuke Yamada, chief forex and rates strategist at Bank of America (NYSE:) in Tokyo.
“We don’t see a very high probability that the Ministry of Finance will intervene at the same level as last year – and if the move is not rapid, below 150 we might not see intervention at all.”
Australia’s dollar declined 0.24% to $0.6676, putting it on course to snap a four-day winning streak.
Prior to the Chinese services data, the had been slightly stronger following another stronger yuan fixing from the People’s Bank of China, fueling bets for imminent policy support from Beijing.
“This (services data) provides further confirmation that the Chinese economy is slipping towards a double-dip slowdown,” Tony Sycamore, a markets analyst at IG in Sydney, wrote in a client note.
“In the short term, it’s not great news for the AUD,” he said. “However more broadly, it will provide support … on expectations of an imminent policy response from Chinese authorities.”
The yuan headed for its first down day in four sessions in the offshore market, slipping 0.13% to 7.2425 per dollar.
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