Forex

Dollar Pulls Back, Still Boosted by Fed Minutes

The US dollar slightly fell back but stayed near a week and a half highs against other major currencies on Thursday. The minutes of the Federal Reserve’s latest policy meeting supported the greenback as expectations for upcoming US rate hikes grew.

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US dollar index, which is used to measure the greenback’s strength against a trade-weighted basket of six other major international currencies, inched lower to 89.96 by 05:15AM ET (09:15 GMT). It dropped 0.08 percent off of a week and a half high of 90.17 reached overnight.

The euro rose 0.09 percent with EUR/USD trading at 1.2295. GBP/USD meanwhile fell to 1.3890, lower by 0.20 percent.

Sterling came under pressure following official data which showed that Britain’s annual economic growth was revised downward for the fourth quarter.

On Thursday, data in the eurozone showed that February business confidence worsened in Germany.

On the other hand, the yen and Swiss franc grew stronger. USD/JPY traded down by 0.42 percent, reaching 107.31. USD/CHF also dropped by 0.12 percent to 0.9378.

The Aussie and Kiwi were higher with AUD/USD rising 0.19 percent to 0.7819. NZD/USD was up to 0.7330, increasing by 0.15 percent.

However, USD/CAD slid down to 1.2683, falling by 0.16 percent.

Fed’s January Policy Meeting

The minutes of the Federal Reserve’s January policy meeting were released on Wednesday.

The report showed that the central bank officials predict an increase in economic growth and a rise in inflation. They used the two outlooks to justify their continued gradual interest rates hike.

Despite sustained worries over the US deficit, the news was enough to support the greenback. US deficit is estimated to reach almost $1 trillion by the time 2019 comes. This was mostly caused by the recent announcement of infrastructure spending and large corporate tax cuts.

Up until recently, the dollar had been pressured lower by expectations for a faster pace of monetary tightening outside of the country. This is expected to decrease the divergence between the Fed and other central banks.

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