Dollar Advances in Subdued Trade

The dollar settled near four-month highs against a basket of major currencies during the course of a subdued trade on Wednesday, boosted by global growth concerns that continued to affect the market sentiment and with no major U.S. data anticipated within the day.

Market players remained cautious after the forecasts for global economic growth in 2016 was revised to 3.1%, from the previous 3.2%, and anticipates to bounce back to 3.4% next year.

The IMF lowered their U.K growth estimate to 1.7% from an earlier forecast of 1.9% this year and cut 2017 growth to 1.3% from April’s forecast of 2.2% over Brexit vote.

Meanwhile, GBP/USD rose about 0.48% to end the session at 1.3175, suggesting a one-week low of 1.3064.

The pound edge higher after the unemployment rate posted declines of 4.9% in three months to May from April’s reading of 5.0%, compared to forecasts for an unchanged reading.

The claimant count has seen a 400 increase in June, compared to estimates of an added 3,500 people, followed by an improved 12,500 in the last month.

Further, the average earnings index, and bonuses rallied 2.3% in the three months to May, relative to estimates and after a 2.0% increase in the three months to April.

In the exclusion of bonuses and wages, it advanced to 2.2%, missing the 2.3% expected gains, followed by a 2.2% rally in the three months to April.

USD/JPY climbed by about 0.18% to end the session at 106.45, suggesting its highest level on the record, while USD/CHF added 0.18% to 0.9875 in late trade.

Japan’s currency remained struggling, as heightened expectations for another monetary easing by the Bank of Japan (BOJ) kicked off.  

EUR/USD remained flat at 1.1013, settling at a one-month low of 1.0981 earlier.

Apparently, the Australian and New Zealand dollars inched lower, with AUD/USD drops to 0.32% at 0.7483, while NZD/USD has seen declines of 0.33% to end the session at 0.7032.

Subsequently, USD/CAD added 0.27% to changed hands at a one-week high of 1.3057.

The U.S. dollar index, which gauges the dollar’s strength against other major currencies, rallied by about 0.08% and settled at 97.14, hitting below a four-month high of 97.37 readings overnight.

Dollar Finds Support from Strong US Data

The greenback gave back their gains against Japan’s currency during the course of Wednesday’s session, but it hits a nearly four-month peak against a basket of major currencies fueled by a strong U.S. data and mounting anticipations over the Bank of Japan’s added easing move. 

"If the BOJ doesn't take any action, the dollar/yen can fall back to 100 again," said Kaneo Ogino, director at foreign exchange research firm Global-info Co in Tokyo.

"But now the focus has also shifted to the possibility of a U.S. interest hike," he said, which will likely underpin the dollar even in the event the BOJ decides not to ease this month.

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