The dollar
snapped two days of declines against the euro, rallying from the lowest
level in a month, as traders added to bets the Federal Reserve will
raise interest rates by year-end.
The U.S. currency also rose from a one-week low versus the yen as
futures showed the odds of a quarter-point increase in the Fed's target
rate rose. Minutes of the Fed's April meeting, released yesterday,
showed most policy makers viewed the cut in the rate to 2 percent as
``a close call,'' judging risks between weaker growth and faster
inflation had become more balanced. The New Zealand dollar rose to a
two-week high.
``The minutes certainly didn't give you any reasons to sell the
dollar,'' said Daragh Maher, a senior currency strategist in London at
Calyon, the investment-banking unit of Credit Agricole SA, France's
third-biggest lender. ``The minutes validated the market's view that
the Fed is going to keep rates on hold for the time being.''
Futures on the Chicago Board of Trade show traders see an 88 percent
chance the Fed will keep its target rate for overnight lending between
banks at 2 percent on June 25. Traders also see a 21 percent chance the
Fed will lift the target in September to 2.25 percent, up from a 19
percent chance yesterday.
Gains for the dollar may be limited before a government report that
will probably show falling U.S. house prices. The Office of Federal
Housing Enterprise Oversight will today say prices fell 1.3 percent in
the first quarter, according to the median forecast of 13 economists
surveyed by Bloomberg.