Dollar drifts as impact from Fed minutes fades

The dollar drifted on Thursday as impact from the Federal Reserve’s policy meeting minutes and supportive comments from a top US official faded, while the Australian dollar slipped in the wake of downbeat economic data.

The greenback was little changed at 113.300 yen.

The US currency fell to a low of 112.905 yen overnight following the release of the Fed’s meeting minutes. It pulled back to a high of 113.460 early on Thursday after US Treasury Secretary Steven Mnuchin reportedly reiterated that a strong dollar was a “good thing” in the long run.

The dollar index against a basket of six major currencies inched up 0.1 percent after falling by roughly the same amount the previous day.

“I think Mnuchin’s comments are neutral for the market overall,” said Masashi Murata, senior currency strategist at Brown Brothers Harriman in Tokyo. “Their impact appears to have faded as he had already expressed such views before. We have to remember Mnuchin was referring to the dollar’s long- term prospects, and that he did suggest before that too strong of a dollar could have negative effects in the short term.”

The minutes from the January 31 to February 1 Federal Open Market Committee ( FOMC) meeting was a mixed bag for currencies as while policymakers were not as hawkish as some had hoped, their views still kept the prospect of a March interest rate hike in play.

The FOMC minutes noted many policymakers said it may be appropriate to raise interest rates again “fairly soon” if jobs and inflation data come in line with expectations.