The U.S. Dollar Index held near to a 3-week trough following the release of the latest policy minutes from the U.S. Federal Reserve Bank which disappointed investors hoping that the greenback would soon be experiencing a revival. According to the minutes, the policy making committee remains more dovish than previously believed, essentially dashing any hopes for an interest rate hike in the first quarter of next year; Fed officials were concerned that their forecasts would lead investors to the mistaken belief that the Fed was planning an intensive rate hike cycle. JP Morgan analysts further pointed out that Fed officials failed to discuss the timing of the cessation of the QE taper relative to increasing interest rates except to say that “considerable time” would elapse which Janet Yellen later said could mean around six months.
As reported at 10:52 a.m. (JST) in Tokyo, the U.S. Dollar Index dipped to 79.527 .DXY, a decline of 0.3% and totaling a more than 1% fall for the week, now well off last Friday’s 7-week peak at 80.599 .DXY. The EUR/USD extended its recovery to $1.3855, moving away from last week’s low of $1.3672; analysts say that it is possible that the $1.3877 level could be broken and take the pair higher. The USD/JPY remained near to a 3-wee low at 102.09 Yen.
Aussie Lifted Only by Jobs Data
In Australia, a report showing that employment unexpectedly improved last month reinforced investors’ belief that the Reserve Bank of Australia would maintain their interest rate policy rather than begin rate cuts. The news helped the Aussie Dollar to break above a key resistance level; the AUD/USD pair reached a 5-month peak at $0.9440 before falling back to $0.9409, a gain of 0.2%. Limiting the Aussie Dollar’s gains was disappointing trade data from China which increased investor concerns of a Chinese growth slowdown which impacts the Australian export market.