Forex – Dollar Index Turns Higher but Gains Capped

© Reuters. Dollar regains some ground but upside limited – The U.S. dollar turned higher against other major currencies on Wednesday, recovering from earlier losses but gains were expected to remain limited as investors were still cautious following the recent rout in global equities.

Sentiment waned after on Friday following the release of strong , which sparked concerns over rising inflation, sending bond yields sharply higher.

The index was particularly hit on Monday, when it recorded its worst daily point drop in history.

However, U.S. equities rebounded on Tuesday, leading to a downward turn in the greenback, which had benefited from Wall Street’s sharp decline.

The , which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.16% at 89.65 by 05:15 a.m. ET (09:15 GMT), off the nearly two-week peak of 89.58 reached overnight.

The euro and the pound were lower, with down 0.20% at 1.2351 and with shedding 0.29% to 1.3910.

In the euro zone, German political leaders were said to have in coalition talks Wednesday morning.

The yen was stronger, with down 0.42% at 109.09, while rose 0.27% to 0.9385.

Elsewhere, the Australian and New Zealand dollars were lower, with declining 0.47% to 0.7869 and with sliding 0.35% to 0.7314.

Market participants were looking ahead to the RBNZ’s monthly policy decision, due early Thursday. The central bank was expected to leave interest rates on hold at .

Investors will especially be focusing on the RBNZ’s for potential indications on the central bank’s future policy moves.

Meanwhile, added 0.18% to trade at 1.2515.

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