The U.S. dollar was steady on Wednesday as investors tempered their risk appetites ahead of the release of minutes of the Federal Reserve’s policy meeting that could offer clues on the outlook for inflation and interest rates.
The Fed on Wednesday will release the minutes from its most recent meeting, with investors looking for any sign of discussions around moderating the pace of interest rate hikes.
The dollar index, which measures the greenback against six major peers, was last up 0.056% at 107.130, having slipped 0.65% overnight.
The overnight move reflected better risk sentiment as stocks and bonds rallied on the back of better corporate earnings and expectations of slower rate hikes from the Fed, said Carol Kong, a currency strategist at Commonwealth Bank of Australia.
Fed Chair Jerome Powell said this month that, while borrowing costs would need to rise further, the central bank might raise interest rates in smaller increments in the future.
New Zealand’s central bank raised interest rates by 75 basis points to a near 14-year high of 4.25% on Wednesday.
The central bank said the cash rate needed to reach a higher level earlier than previously indicated to tame inflation. It also increased the projected peak for the cash rate to 5.5% in September 2023.