In currency markets, the dollar remained strong on Tuesday, with the yen hovering around the 156 level, albeit weaker. However, trading activity remained subdued as investors maintained their expectations regarding the timing and magnitude of potential Federal Reserve interest rate cuts this year.
Cryptocurrencies experienced a rally, led by a surge in ether, driven by growing anticipation of the approval of spot ether exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission (SEC).
Against the yen, the dollar saw a slight increase to 156.41 in the Asian trading session.
The yen has been trading within a narrow range recently, with concerns about possible intervention from Japanese authorities preventing significant declines in the currency. Nonetheless, the substantial interest rate differentials between the U.S. and Japan continued to support the yen as a funding currency.
In other currency movements, the euro and sterling saw marginal gains against the dollar, while U.S. economic data releases for the week were limited, shifting investors' attention to speeches by various Fed officials for insights into the future of U.S. interest rates.
Despite calls for caution from several Fed officials, market expectations for rate cuts remained largely unchanged, with investors pricing in two cuts beginning in September.
The dollar stabilized against a basket of currencies at 104.62.
Meanwhile, the New Zealand dollar and the Australian dollar both declined slightly. Minutes from the Reserve Bank of Australia's May meeting revealed a decision to keep interest rates unchanged, with a possibility of rate hikes if inflation forecasts proved overly optimistic.
In the cryptocurrency market, ether surged to a one-month high, following a significant increase in the previous session. Bitcoin also surpassed the $70,000 mark, driven by speculation surrounding potential SEC approval of spot ether ETFs and positive market sentiment following recent U.S. inflation data.
Market analysts attributed the crypto rally to both anticipation of regulatory developments and favorable macroeconomic conditions, highlighting the significance of recent events such as the SEC approval process and the recent Bitcoin halving.