Dollar Index Fell after US Fed Minutes
Currency Chart

Dollar Index Fell after US Fed Minutes

The US dollar was lower against its major trading partners Wednesday after Federal Open Market Committee’s July 26-27 meeting minutes.  The dollar index DXY fell to 106.39 after the meeting minutes were released, before rebounding back to 106.55, up 0.09% on the day.

In its minutes, Fed said recent indicators of spending and production have softened. Nonetheless, job gains have been robust in recent months, and the unemployment rate has remained low. Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures.

It noted that Russia’s war against Ukraine is causing tremendous human and economic hardship. The war and related events are creating additional upward pressure on inflation and are weighing on global economic activity.

The Committee is highly attentive to inflation risks, the minutes added. A quick summary of foreign exchange shows that USDJPY rose to 135.0626 from 134.2422 at the Tuesday US close and 134.2734 at the same time Tuesday morning.

The string of Japanese trade deficits continued in July, data released overnight showed. The Bank of Japan is expected to keep its accommodative monetary policy stance at its next meeting on Sept. 21-22.

USDCAD rose to 1.2904 from 1.2843 at the Tuesday US close but was marginally below the 1.2909 level at the same time Tuesday morning. There are no Canadian data on Wednesday’s schedule.

On Tuesday, Statistics Canada reported a slower pace of overall consumer inflation growth but an uptick in core CPI. The Bank of Canada’s monetary policy committee meets next on Sept. 7 and is expected to raise interest rates further to fight stubborn price growth.

USDEUR slipped to 1.0161 from 1.0171 at the Tuesday US close but was up from 1.0126 at the same time Tuesday morning. Eurozone GDP and EU employment both rose slower than expected in Q2, data released earlier Wednesday showed.

The next European Central Bank meeting is scheduled for Sept. 9 where a 50-basis point rate increase is expected. GBPUSD fell to 1.2069 from 1.2098 at the Tuesday US close and 1.202 at the same time Tuesday morning.

UK consumer inflation hit its highest point in 40 years in July, data released earlier Tuesday showed, adding to the chances that the Bank of England will raise interest rates by another 50 basis points at its Sept. 15 meeting.

In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. READ: U.S Dollar Trades Mixed Ahead of Trade Data

The minutes read that the Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals.

The Committee’s assessments will take into account a wide range of information, including readings on public health, labour market conditions, inflation pressures and inflation expectations, and financial and international developments. # Dollar Index Fell after FOMC Minutes