A gauge of the dollar remained lower before the Federal Reserve releases minutes of its most recent meeting amid speculation an uneven economic recovery will prompt policy makers to hold borrowing costs near zero.

The greenback held losses from yesterday that came as Minneapolis Fed President Narayana Kocherlakota said inflation may run below the central bank’s target, while his Richmond counterpart Jeffrey Lacker tempered his previous expectation for more robust growth. China’s yuan rose to the strongest in three months as talks got underway with the U.S. and before a report forecast to show June’s trade surplus was the biggest since 2009. New Zealand’s dollar was within 0.3 percent of the record high after Fitch Ratings raised the nation’s credit outlook.

“So far, Fed members this week have sounded more dovish and created some uncertainty in the market heading into the minutes,” said Stan Shamu, a market strategist at IG Ltd. “The market will be cautious on the dollar before the minutes though we may see a bit of a bounce after the release.”

The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major counterparts, slipped 0.1 percent to 1,005.68 as of 7:24 a.m. in London after falling 0.1 percent yesterday. The dollar was at 101.59 yen after losing 0.3 percent to 101.57 yesterday. It weakened 0.1 percent to $1.3626 per euro.

‘Considerable Time’

The Fed will publish today minutes of its June 17-18 meeting, when officials trimmed monthly bond purchases to $35 billion. U.S. central bank Chair Janet Yellen said rates will probably stay low for a “considerable time” in a press conference after the gathering.

Inflation in the world’s biggest economy may run below the Fed’s 2 percent target until 2018, Kocherlakota said in a speech yesterday.

“Sustained acceleration of growth to something over 3 percent in the near future is unlikely,” Lacker said in separate remarks in Charlotte, North Carolina.

There’s a 92 percent chance U.S. policy makers will keep benchmark borrowing costs between zero and 0.25 percent by December, according to fed funds futures data compiled by Bloomberg.

The dollar weakened 0.5 percent in the past month, according to Bloomberg Correlation-Weighted Indexes that track 10 developed-nation currencies. The yen gained 0.6 percent, while the euro lost 0.2 percent. The New Zealand dollar advanced 3.7 percent, the best performance within the gauge.

Outlook Raised

Fitch raised New Zealand’s credit outlook to positive from stable yesterday, citing the nation’s improving fiscal situation and supportive economy. The credit assessor affirmed the country’s AA rating, two levels below the top score.

“A lot more hard work still needs to be done to receive an actual upgrade,” ANZ Bank New Zealand Ltd. analysts Con Williams and Sam Tuck wrote in an e-mailed note to clients today. “An upgrade isn’t probably what exporters would want to see in the current environment though, with the NZD/USD getting a lift from the Fitch announcement.”

New Zealand’s currency added 0.3 percent to 88.13 U.S. cents after touching 88.18, the strongest since Aug. 1, 2011, when it reached a post-float high of 88.43.

The yuan rose as U.S. Treasury Secretary Jacob J. Lew urged the Asian nation to disclose when and why it intervenes in currency markets, according to an interview with CCTV America, part of China Central Television. Lew is in Beijing for the two-day Strategic and Economic Dialogue with Chinese leaders.

China Trade

China’s exports probably rose 10.4 percent last month from a year earlier, contributing to a trade excess of $37 billion, according to the median estimate of economists surveyed by Bloomberg News before data due tomorrow.

“It’s usual for China to allow some yuan gains given the political pressure as talks start,” said Kenix Lai, a Hong Kong-based currency analyst at Bank of East Asia Ltd. “An improving exports outlook and wider trade surplus will also support the yuan to test 6.175 per dollar in the near term.”

The currency climbed 0.1 percent to 6.1973 per dollar, China Foreign Exchange Trade System prices show. It touched 6.1940, the strongest level since April 9. The People’s Bank of China raised the reference rate by 0.1 percent, the most in a month, to 6.1565. The yuan traded 0.7 percent weaker than the fixing, within the 2 percent limit.

 

Source: Bloomberg

 

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