Dollar slumps ahead of Fed meeting’s minutes release
THE dollar slumped yesterday as dealers awaited the release of minutes from the Federal Reserve’s last meeting, while an overnight jump in oil prices lifted emerging Asian currencies.
The US central bank is due to release today the minutes of its July 26-27 meeting, when it left key interest rates unchanged.
But the Fed acknowledged an improved performance in the world’s top economy, suggesting a rate hike may still be on the horizon this year.
A rise in borrowing costs would tend to stoke demand for dollardenominated assets, boosting the greenback.
“The market really has not moved to price in any more chance of Fed tightening,” Daniel Katzive, head of foreign-exchange strategy for North America at BNP Paribas, told Bloomberg News.
“That’s sapped the dollar of any momentum.”
In Tokyo the dollar slipped to 100.44 yen from 101.25 yen in New York and its lowest level in about a month, while the euro was at $1.1191 against $1.1183.
The pound traded at $1.2902 against $1.2883 in the US, still near its weakest levels in more than 30 years touched in the aftermath of the Brexit vote.
The dollar also dropped against higher-yielding emerging market currencies, which benefited from stronger oil prices and an uptick in investor sentiment.
The oil-linked Malaysian ringgit, the South Korean won, the Singapore and Taiwan dollars, the Philippine peso and the Indonesian rupiah all rose against the US currency in yesterday’s trade.
“A recovery in risk appetite is sending emerging currencies stronger,” said Wu Mingze, a Singapore-based foreign-exchange trader at INTL FCStone Inc.
“Commodities are rallying, lifting stock prices and commodity currencies.” –