Dollar near a one-week high on Fed minutes

by Jonathan Adams

The dollar index was a bit higher at 104.93 after gaining 0.28% the day earlier

The dollar hovered near a one-week high on Thursday after its biggest daily percentage gain this month against major rivals a day before as minutes of the last Fed meeting revealed a willingness to hike interest rates among some officials.

The pound was unmoved by the announcement of a British election, having climbed to a two-month high following hotter-than-expected inflation on Wednesday, while the New Zealand dollar continued its jump as an unexpected increase in local retail sales added to hawkish guidance from the central bank pushing back bets for rate cuts.

The dollar index, which tracks the currency against six major rivals including sterling, the euro and yen, was a bit higher at 104.93 after gaining 0.28% the day earlier.

Fed officials at their April 30-May 1 session indicated they still had faith that price pressures would ease, if only slowly, but the meeting summary also reflected discussion of possible tightening, according to the minutes released Wednesday.

The minutes provide further pushback against market expectations for the Fed to begin reducing rates this year, said Lee Hardman, senior FX strategist at MUFG in a note, though he added that since that Fed meeting on May 1 “the U.S. economic data flow has softened”.

MUFG expect the Federal Reserve to wait until at least September to trim rates.

The delayed start to the Fed’s rate cut cycle remains a supportive development for the U.S. dollar but at the current juncture it is not sufficient on its own to encourage an even stronger U.S. dollar, according to Hardman.

The euro was flat at $1.0824, having dropped 0.3% the day earlier, with PMI data today likely to set the tone for the single currency.

Disclaimer: The opinions expressed by our writers are their own and do not represent the views of Trading and Investment News. The information provided on Trading and Investment News is intended for informational purposes only. Trading and Investment News is not liable for any financial losses incurred. Conduct your own research by contacting financial experts before making any investment decisions.

Related Posts

    Sign up for our newsletter

    Get our latest downloads and information first. Complete the form below to subscribe to our weekly newsletter.

    © Copyright 2024-25
    Trading and Investment News.
    Managed By News Media International A Brand Of CAS Media Group Publishing Ltd whose registered office is – 12 Deer Park Road, Wimbledon, SW19 3TL.

    Latest articles