Dollar jumps after Fed meeting minutes
The U.S. dollar jumped against a basket of currencies on Wednesday, as traders used the opportunity of the Federal Reserve’s release of minutes from its last policymaking meeting to take profits.
The readout of the Fed’s July 28-29 meeting, published on Wednesday, showed the central bank is considering tweaks to monetary policy that could result in it sticking with aggressive stimulus measures far longer than under its previous rubric. The minutes also showed policymakers concerned that a recovery from the economic downturn triggered by the coronavirus pandemic faces a highly uncertain path.
In recent weeks, the Fed’s steps to counter the economic effects of the coronavirus pandemic have helped lift riskier assets to all-time highs even as it has reduced demand for safe-havens, battering the U.S. dollar. But the minutes, despite the dovish tone, led to a sell-off in stocks and a rally in the dollar.
Analysts said the jump in the dollar on Wednesday reflected profit-taking in some corners of the market, as well as disappointment from traders who expected an even more dovish perspective from the Fed.
The U.S. dollar index =USD, which measures the currency against a basket of six rivals, was 0.84% higher at 92.978, having risen as high as 93.059 before paring some of those gains. On Tuesday, the index slipped as low as 92.124, its weakest since May, 2018, as U.S. stock indexes hit record highs, driven by the Fed’s stimulus endeavors.
Treasuries Benchmark 10-year notes last rose 5/32 in price to yield 0.6541%, from 0.669% late on Tuesday.
The 30-year bond last rose 22/32 in price to yield 1.3705%, from 1.399%.
The euro down 0.75% to $1.184. The Japanese yen weakened 0.62% versus the U.S. currency to 106.05 per dollar.
Reference: Reuters
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