The US dollar was steady near a six-week high on Wednesday as investors come to terms with the possible need for higher interest rates to tackle inflation due to the Iran war, pushing the Japanese yen back into the intervention zone.
The uncertainty over when the Middle East war may end has weighed on sentiment, fanned inflation fears and triggered a global bond sell-off, with the yield on the US 30-year Treasury bond hitting its highest level since 2007.
President Donald Trump said the country might need to strike Iran again, but suggested Iran wants a deal to end the war that has roiled markets and sent energy prices soaring.
Meanwhile, the Australian dollar, often seen as a barometer for risk sentiment, was 0.1% lower at 70.97 US cents.
Carol Kong, currency strategist at Commonwealth Bank, said she expected the minutes to be hawkish, pushing the dollar up further, noting that more Fed policymakers have warned about high US inflation since the last Fed meeting in April.
“We continue to expect the FOMC to start a tightening cycle in December,” Ms Kong said.
The fragile ceasefire agreed in April has mostly held, although markets remain worried because the Strait of Hormuz — a key route for global supplies of oil and other commodities — remains effectively closed.
Brent crude futures were at $US110.8 per barrel in early trading, well above the levels before the war started at the end of February.
Reporting with Reuters