By Sarah Turner, MarketWatch
SYDNEY (MarketWatch) — The dollar retreated in Asian trading Wednesday, as traders prepared for the release minutes from the Federal Reserve’s latest interest-rate setting meeting, due later in the global day.
The dollar index (DXY 78.42, -0.15, -0.20%) , which measures the greenback against a basket of six currencies, declined to 78.384 on Wednesday, from 78.592 in late North American trading Tuesday.
“The minutes may undermine the U.S. dollar if a likely dovish slant continues to be expressed, but given that the Federal Open Market Committee decision at that meeting to hold policy-setting unchanged had no dissenters, this should not come as a surprise,” said currency strategists at Credit Agricole.
In addition, U.S. producer price index data, housing starts and industrial production data were due later Wednesday.
Also slated for Wednesday was the Bank of England’s inflation report.
U.K. consumer price inflation came out Tuesday in line with consensus at 4%. Still, the figure was above the 2% target, and triggered a letter from the Bank of England to the Chancellor.
“Given the rather hawkish tone in Governor King’s letter to Chancellor, we believe the inflation report is likely to be viewed as broadly in line with market expectations of a May hike, which would be sterling-positive,” said currency strategists at Barclays Capital.
Sterling (GBPUSD 1.6155, +0.0029, +0.1799%) traded at $1.6154, compared with $1.6125 in late North American trading Tuesday.
The euro (EURUSD 1.3522, +0.0033, +0.2447%) advanced to $1.3527, from $1.3486 in late U.S. trading, extending gains made Tuesday when European officials said that the region’s bailout fund will be able to lend €500 billion ($676 billion). Read more on Europe's bailout fund.
WestLB, which is controlled by the German state, reached a fresh deal on restructuring late Tuesday, Dow Jones Newswires reported.
“The announcement by the German Finance Minister this morning of a restructuring plan for WestLB may give the currency some support,” said analysts at Credit Agricole.
Against the Japanese yen, the dollar (USDYEN 83.7200, -0.0500, -0.0597%) eased to ¥83.69, down from 83.77 in late North American trading on Tuesday.
