News: FOREX-Dollar holds fast before Fed, bitcoin crumbles on China risk

Graphic: World FX rates https://tmsnrt.rs/2RBWI5E
Fed minutes loom on horizon
Traders also look to CPI data from Britain and Canada
Monetary policy outlook holds key to dollar's direction
China's policy moves unsettle cryptocurrencies
The dollar steadied against major currencies on Wednesday as traders awaited U.S. Federal Reserve minutes, but bitcoin tumbled after China banned its financial institutions from offering services related to cryptocurrency assets.
The minutes from the Fed's most recent meeting due later on Wednesday are expected to confirm that policymakers think a rate hike is still in the distance.
Investors will also be scrutinising consumer price data in Britain and Canada later in the trading day to determine how quickly major economies may be forced to rein in their accommodative monetary policy, which holds the key to the dollar's trend in the medium term.
"I'm most concerned about the relative strength of inflation," said Masafumi Yamamoto, chief currency strategist at Mizuho Securities in Tokyo.
"The recent release of U.S. consumer prices printed quite high. If Britain and Canada remain below that level, it suggests the pace of normalisation in the United States will be faster. Dollar selling may not last much longer."
Against the Canadian dollar CAD=D3 , the greenback traded at C$1.2076, close to its weakest since May 2015.
The British pound GBP=D3 bought $1.4187, which was near its strongest level since late February.
The euro EUR=D3 was steady at $1.2231. The dollar was little changed at 108.96 yen JPY=D3 and 0.8974 Swiss franc CHF=EBS .
Data last week showing U.S. consumer prices rose 4.2% in April from a year earlier was the fastest increase in more than a decade, raising fears the Fed will have to start raising interest rates sooner than expected.
Fed policymakers have said the spike is temporary and reiterated that they expect rates to remain low, which has taken some steam out of the dollar, though not all are convinced by the Fed's line.
The dollar index =USD against a basket of six major currencies was quoted at 89.732, close to the lowest since late February.
Expectations for policy tightening in Canada and the gradual lifting of coronavirus restrictions in Britain have lifted both countries' currencies, but any suggestion of benign inflation could help the greenback recoup some of its losses.
In the cryptocurrency market, bitcoin BTC=BTSP tumbled below the closely-watched $40,000-mark to a three-month low of $39,000. Rival digital currency ether ETH=BTSP dropped by more than 13% to $2,900, which is a two-week low.
Regulatory risk has emerged as a negative factor after China banned its financial institutions from offering cryptocurrency registration, trading, clearing, and settlement in a blow to investors who were betting that digital assets will gain mainstream status.
Elsewhere, the Australian AUD=D3 and New Zealand dollars NZD=D3 eased slightly as the Antipodeans struggled to break through heavy technical resistance, but sentiment remains positive due to rising commodity prices, some traders said.
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	Currency bid prices at 0455 GMT 
 Description	  RIC		 Last		   U.S. Close  Pct Change	 YTD Pct	 High Bid	Low Bid 
											  Previous				   Change				  
											  Session											
 Euro/Dollar	   EUR=EBS	$1.2231		$1.2224	 +0.06%		 +0.11%	  +1.2236	 +1.2218 
 Dollar/Yen		JPY=EBS	108.9650	   108.9050	+0.02%		 +5.46%	  +109.0700   +108.8900 
 Euro/Yen		 																			 
 Dollar/Swiss	  CHF=EBS	0.8974		 0.8977	  -0.03%		 +1.44%	  +0.8985	 +0.8972 
 Sterling/Dollar   GBP=D3	 1.4187		 1.4189	  -0.01%		 +3.84%	  +1.4199	 +1.4180 
 Dollar/Canadian   CAD=D3	 1.2073		 1.2061	  +0.11%		 -5.18%	  +1.2080	 +1.2062 
 Aussie/Dollar	 AUD=D3	 0.7784		 0.7791	  -0.08%		 +1.19%	  +0.7797	 +0.7779 
 NZ				NZD=D3	 0.7231		 0.7239	  -0.10%		 +0.71%	  +0.7246	 +0.7226 
 Dollar/Dollar																				   
All spots FX= Tokyo spots AFX= Europe spots EFX= Volatilities FXVOL= Tokyo Forex market info from BOJ TKYFX
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World FX rates	https://tmsnrt.rs/2RBWI5E 
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