On Tuesday, the dollar remained firm while the yen struggled to stay above the 156 level, with trading largely rangebound as investors maintained their views on the timing and extent of Federal Reserve rate cuts expected this year.
Cryptocurrencies saw a rally, led by a significant surge in ether amid growing anticipation that the U.S. Securities and Exchange Commission (SEC) would soon approve spot ether exchange-traded funds (ETFs).
The dollar rose 0.07 percent against the yen, reaching 156.37 in the early Asian session. The yen has been trading within a narrow range recently, as concerns about potential intervention from Japanese authorities have deterred traders from pushing the currency to new lows. However, the substantial interest rate differentials between the U.S. and Japan continue to make the yen attractive as a funding currency.
Meanwhile, the euro edged up 0.03 percent to $1.0860, and sterling similarly gained 0.03 percent to $1.27095.
With a light U.S. economic data calendar this week, attention shifts to various Federal Reserve speakers for insights into the U.S. rate outlook and the potential start of an easing cycle. Several officials on Monday advocated for continued policy caution, despite last week's data showing a welcome decrease in consumer price pressures for April.
"I think all the comments from various officials will deliver more of the same messages, and the main message will be for the FOMC to continue a patient approach on interest rate cuts," said Carol Kong, a currency strategist at Commonwealth Bank of Australia.
Despite the cautious rhetoric from the Fed, market pricing for rate cuts has remained largely unchanged, with investors anticipating two cuts this year starting in September.
The New Zealand dollar was little changed at $0.6107, while the Aussie rose 0.1 percent to $0.6674 ahead of the Reserve Bank of Australia's May meeting minutes, due later on Tuesday.
The dollar steadied at 104.61 against a basket of currencies.
In the cryptocurrency market, ether jumped more than 5 percent to over a one-month high of $3,691.80, following a nearly 14 percent surge in the previous session, marking its largest daily percentage gain since November 2022. Bitcoin also climbed more than 3 percent, breaking above the $70,000 level, last trading at $71,259.
Analysts attributed the latest crypto rally to speculation about imminent approval of spot ether ETFs by the SEC, following the earlier listing of bitcoin ETFs this year.
"It's absolutely flown," said Tony Sycamore, a market analyst at IG. "I think it's partly due to that speculation, but also to the core U.S. inflation data last week that boosted risk sentiment and brought rate cuts back into play.
"With the SEC approval in January and then the halving out of the way, the crypto market was lacking a catalyst, and I think it was always going to revert back to macro factors. The macro environment has been really positive since last Wednesday."
Paraphrasing text from "Reuters" all rights reserved by the original author.
