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Dollar edges down as Fed minutes offer few rate cut clues

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The Dollar declined on Thursday after reaching close to a three-week high on Wednesday, as the minutes from the Federal Reserve’s December meeting gave little indication of when the US may begin cutting rates.


The minutes showed officials at the Fed were convinced inflation was coming under control and were concerned over the risks of the bank’s “overly restrictive” monetary policy on the country’s economy.


That said, there were no clear clues as to when the central bank may begin easing, Reuters reports.


The Dollar index – measuring the currency against major peers – declined 0.11% to 102.29, after reaching a three-week high of 102.73 on Wednesday.


“The messaging that rates will stay elevated raises a second look at the aggressive cut expectations markets are pricing,” according to Christopher Wong, a currency strategist at OCBC.


Elsewhere, the Euro increased 0.25% to $1.0950 at the time of writing, after falling to over a fortnight-low on Wednesday as France and other EU nations announced inflation figures.


INSEE, the official statistics agency in France, reported a 4.1% EU-harmonised inflation rate last month, as forecast by economists polled by Reuters.


Whereas the German state of North Rhine-Westphalia announced a 3.5% inflation rate in December, up from 3% the month before.


“There are some risks that a higher headline print will prompt some repricing of the highly dovish European Central Bank rate expectations,” said ING FX strategist, Francesco Pesole.


“We could see some euro performance emerging in the crosses in the short run but some improvement in the eurozone economic outlook remains necessary to make any rally sustainable.”


Furthermore, Sterling increased 0.25% to $1.2694.


In Australia, the Dollar rose 0.2% to $0.6744, moving away from the two-week low on Wednesday of $0.6703. Whereas in New Zealand, the Dollar edged up 0.26% to $0.6263, after also hitting a fortnight-low the day before of $0.6221.


In addition, the Dollar reached more than a two-week top against the Japanese Yen, up to a high of 143.90 Yen, and was last trading up 0.3% at 143.71 at the time of writing.

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Mauritius,
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Lithuania,

media contact

About

deVere Group – Foreign Exchange’s Public Relations Department deals with all areas of the media and external communications including international, national, regional, local, trade, consumer, print, broadcast, social and online. The Department aims to provide a helpful service to journalists, broadcasters and editors, amongst others, and reply to all media enquiries, including urgent enquiries out of hours, within agreed deadlines.

Contact

Our press office does not have access to client details and will not be able to assist with individual client enquiries. Please contact deVere Group – Foreign Exchange’s Head of Public Relations on [email protected] or call +44 2071220925.