Dollar holds, Fed minutes in focus

The dollar yesterday held above 6-1/2-month lows hit in previous days, as comments from a senior Federal Reserve official rekindled expectations of possible US interest rate rises.

The dollar had lost nearly all of its gains since the US elections last November as investor hopes for a fiscal boost from President Donald Trump were dulled by a scandal over his firing of former FBI director James Comey. That, along with a recent sub-par US data has weighed on the dollar in past weeks. Citi’s Economic Surprise Index for the United States is at its lowest since February 2016, which could mean further unexpected events on the downside.

The dollar index hit 96.767 earlier in the week, its lowest since November 9, but edged lower from Tuesday’s close to trade at 97.318.

“Perhaps given that the FOMC [Federal Open Markets Committee] was relatively hawkish ... the market might expect the minutes to be on the hawkish side,” said Athanasios Vamvakidis, currency strategist at Bank of America in London.