U.S. Dollar Weakens As Fed Minutes Cast Rate Hike Worries
August 16 2017 - 11:10PM
RTTF2
The U.S. dollar slipped against its major opponents in the Asian
session on Thursday, as minutes from the Fed's July meeting showed
that officials were more worried about inflation, with the members
divided over the timing of a future interest rate hike amid
inflation risks. The minutes indicated that some members want to be
"patient" on raising interest rates on caution about "the recent
decline in inflation" and said the Fed "could afford to be patient
under current circumstances."
Many senior officials saw a greater likelihood that "inflation
might remain below 2% for longer than they currently expected" and
risks to the inflation outlook could be tilted to the downside.
Those members argue that the Fed may hold off its next rate hike
"until incoming information confirmed that the recent low readings
on inflation were not likely to persist."
Meanwhile, the minutes indicated that the Fed remains on track
to unwind its $4.5 trillion balance sheet at an "upcoming"
meeting.
The currency was lower on Wednesday amid political turmoil in
Washington and receding Fed rate hike expectations after the
release of minutes.
The greenback declined to a 2-day low of 1.2909 against the
pound, compared to 1.2890 hit late New York Wednesday. If the
greenback slides further, 1.31 is possibly seen as its next support
level.
The greenback hovered at a 2-day low of 1.1790 against the euro,
down from Wednesday's closing value of 1.1766. Continuation of the
greenback's downtrend may see it challenging support around the
1.19 region.
The greenback that closed Wednesday's trading at 0.9658 against
the franc fell to a 3-day low of 0.9638. On the downside, the
greenback may challenge support around the 0.94 mark.
The greenback slid to a weekly low of 0.7335 against the kiwi,
near 2-week lows of 1.2601 against the loonie and 0.7950 against
the aussie, off its early highs of 0.7303, 1.2634 and 0.7917,
respectively. The next possible support for the greenback may be
seen around 0.74 against the kiwi, 1.25 against the loonie and 0.80
against the aussie.
The greenback weakened to a 2-day low of 109.67 against its
Japanese counterpart and held steady thereafter. The greenback is
poised to challenge support around the 108.00 level.
Data from the Ministry of Finance showed that Japan logged a
merchandise trade surplus of 418.8 billion yen in July.
That topped forecasts for a surplus of 327.1 billion yen but was
down from 439.8 billion yen in June.
Looking ahead, U.K. retail sales for July, Eurozone trade data
for June and final consumer prices for July as well as the ECB
minutes of the July 19-20 monetary policy meeting are due in the
European session.
In the New York session, U.S. weekly jobless claims for the week
ended August 12, industrial production and leading indicators for
July as well as Canada manufacturing sales for June are set for
release.
Dallas Fed President Robert Kaplan speaks at the "Dialogue with
the Dallas Fed" event hosted by the Lubbock Chamber of Commerce in
Texas at 1:00 pm ET.
Minneapolis Fed President Neel Kashkari speaks at an event
hosted by the Edina Rotary Club in Minnesota at 1:45 pm ET.
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