Dollar higher after data as yen holds near 40-year low

Dollar higher after data as yen holds near 40-year low NEW YORK, July 7 : The dollar advanced on Tuesday, following two straight sessions of slight declines, while the yen held near a four-decade low, as investors continued to watch for signs of possible intervention by Japanese authorities to support the currency. The greenback showed little reaction to reports that Iran fired missiles at ships in the Strait of Hormuz overnight, which sources said left a Qatari LNG tanker at risk of exploding and a Saudi-flagged crude oil tanker damaged in the waterway. U.S. crude rose 1.4 per cent to $69.51 a barrel and Brent rose to $73.05 per barrel, up 1.46 per cent on the day on renewed concerns over supply disruptions. "Ceasefires, by their very nature, fray, but it doesn't mean that they're over. And I think that neither the U.S. nor Iran are looking to extend the conflict, so that's what the market's got confidence in," said Marc Chandler, chief market strategist at Bannockburn Capital Markets in New York. "The market's just sort of churning well-worn ranges." The dollar index, which measures the greenback against a basket of currencies, gained 0.12 per cent to 100.98, with the euro down 0.11 per cent at $1.1426. Federal Reserve Bank of New York President John Williams said in a television interview on Tuesday that he has grown a little less worried about the state of price pressures in the economy due to the recent retreat in energy prices, which he expects to continue. Meanwhile, European Central Bank Governing Council member and Bank of Italy Governor Fabio Panetta said the outlook for the euro zone economy remains fragile, and called for monetary policy decisions to be tested against a range of scenarios given the major shifts in the global economy. On the data front, the Commerce Department said the U.S. trade gap jumped 42.2 per cent to $77.6 billion, compared with the estimate of economists polled by Reuters calling for the deficit to be $78.5 billion, as the AI investment surge helped drive imports of capital goods to a record high. The Japanese yen strengthened 0.08 per cent against the greenback to 161.95 per dollar, after touching 161.66, though it remained not far from a 162.83 trough hit last week. The yen found some support late last week as traders grew wary of a possible shift in Japan's intervention strategy, though they said the currency's sudden jump on Thursday was not indicative of official action. FED HIKE BETS RECEDE Investors will eye the minutes from the Federal Reserve's June meeting, the first under new Chairman Kevin Warsh and scheduled for release on Wednesday, for policymakers' views on forward guidance from the central bank. On Monday, Federal Reserve Governor Christopher Waller said that forward guidance can be a valuable tool under the right circumstances, but can also be a problem when used improperly. Investor expectations of U.S. rate hikes this year have waned slightly following an underwhelming jobs report late last week that came in far below expectations. Investors are now pricing in about 26 basis points worth of Federal Reserve rate hikes by December, down from about 38 bps a week ago, according to LSEG data. Sterling weakened 0.19 per cent to $1.3364 after earlier hitting a three-week high of $1.3401.