The News
Friday 19 of July 2024

Dollar Hits Nearly Eight-Week Low Against Euro Day After Fed Minutes

Dollar bills,photo: CAPITAL MEDIA
Dollar bills,photo: CAPITAL MEDIA
Hopes that the Federal Open Market Committee would become more hawkish were misplaced

NEW YORK – The U.S. dollar hit its lowest level against the euro in nearly eight weeks and an eight-week low against the Swiss franc on Thursday, a day after minutes from the Federal Reserve’s July meeting showed a bias among policymakers against raising interest rates soon.

The minutes showed members of the rate-setting Federal Open Market Committee were generally upbeat about the U.S. economic outlook. Several Fed policymakers, however, said a slowdown in the future pace of hiring would argue against a near-term hike, and FOMC members said they wanted to “leave their policy options open.”

The minutes disappointed those expecting that the Fed could be turning more hawkish. Those expectations had been bolstered by comments from New York Fed chief William Dudley on Tuesday, who said the central bank could possibly raise rates as soon as September.

Dudley on Thursday reinforced his message on the broader economy being on track. While the dollar initially pared losses, it soon shrugged off the remarks and extended losses in the afternoon trading session.

“[Dudley] said his views haven’t changed, but at this point, I think the market has sort of bought back into the dovish Fed story,” said Win Thin, global head of emerging-market currency strategy at Brown Brothers Harriman in New York.

The euro hit a session high of $1.1356 and the dollar touched a session low against the franc of 0.9540 franc. The dollar also slipped to 99.66 yen earlier, a hair above Tuesday’s more than seven-week low of 99.53 yen.

The dollar index, which measures the greenback against a basket of six major currencies, was last down 0.58 percent at 94.170 after touching a nearly eight-week low of 94.141.

Federal funds futures on Thursday implied traders saw a 48.8 percent chance of a Fed rate hike this year, according to data from CME Group’s FedWatch program.

Analysts said the FOMC minutes have had the biggest impact on the dollar, compared with recent Fed policymakers’ comments.

“When we did not receive the unambiguous hawkishness from the FOMC minutes, that kind of opened up the door to additional [dollar] selling,” said Kathy Lien, managing director at BK Asset Management in New York.

The euro was last up 0.56 percent against the dollar at $1.1350. The dollar was down 0.79 percent against the franc at 0.9538 franc and was down 0.29 percent against the yen at 99.95 yen.