Dollar slows growth investors rethink actions of the Fed
2023.02.23 03:05
Dollar slows growth investors rethink actions of the Fed
By Kristina Sobol
Budrigannews.com – After minutes from its most recent policy meeting reinforced the hawkish rhetoric of the central bank, markets warmed up to the idea that the Federal Reserve is likely to continue on its aggressive rate-hike path, which resulted in the dollar losing some ground on Thursday.
According to the minutes of the U.S. central bank’s most recent policy meeting, which took place between January 31 and February 2, nearly all Fed policymakers were in favor of reducing the rate at which interest rates were raised. The FOMC held one meeting on Wednesday.
However, they also stated that bringing down inflation that is too high would be the “key factor” in determining how much higher interest rates should be.
Following the release of the minutes, the dollar fell from its multi-week highs against some of its major peers in Asia trade after a broad gain in the previous session.
The euro gained 0.13 percent to $1.0618, moving away from the $1.0598 low it reached in the previous session, which was roughly seven weeks old.
The gained 0.26 percent to $0.6823 after sliding to a close to seven-week low of $0.6795 on Wednesday due to a missed forecast for Australian wage growth.
Thursday saw a decrease in trading volume due to the holiday closure of Japanese markets.
Christopher Wong, a currency strategist at OCBC, stated, “Many central banks around the world… are trying to put an emphasis in their determination to combat inflation expectations.”
“The higher-for-a-longer thematic may continue to undermine sentiment,” the author warns.
After a decrease of 0.6 percent during the previous session, sterling gained 0.07 percent to $1.2053, while the New Zealand dollar gained 0.29 percent to $0.6238.
The Reserve Bank of New Zealand signaled further tightening ahead to tame high inflation on Wednesday, which continued to provide some support for the.
The lost 0.12 percent to 104.40 against a basket of currencies, but it was still close to its one-month high of 104.67 last week.
NatWest Markets emerging markets strategist Galvin Chia stated, “The easy part of the short USD trade is over.”
“The market bias looks like “good news is bad news” until major releases can change the view – a resilient U.S. economy is risk-negative.”
The incoming Bank of Japan (BOJ) Governor Kazuo Ueda’s speeches are currently the focus of attention in Asia, where the Japanese yen edged higher to 134.81 per dollar.
Investors are looking for clues as to when the BOJ might end its bond yield control policy, and Ueda will speak in parliament on Friday and Monday.
