The dollar held on to its modest overnight gains in early Wednesday trade as traders look to any hints from the U.S. Federal Reserve on the timing and the pace of its future rate hikes.
While local Chinese fret over the bursting of the Shanghai stock bubble, global investors are more worried about the yuan currency which once seemed destined to rise inexorably.
A decade after China released the yuan from its peg to the dollar, ever more international money managers no longer regard the currency as a one-way appreciation bet that will augment their returns on stocks and bonds in dollar terms.
The New Zealand dollar rose on Wednesday after the head of the central bank said further interest rate cuts were likely to be needed to support an economy facing strong headwinds, and get inflation back to its target level. Reserve Bank of New Zealand Governor Graeme Wheeler also said the New Zealand dollar needed to fall further. Prices for dairy products, a key export earner, were also seen falling further, while likely rate rises in Britain and the United States would add pressure to the exchange rate.Publication source