The US dollar was falling falling during the current trading session before the Federal Reserve released the minutes of its latest policy meeting. The currency bounced after the release, gaining on the euro. The greenback also trimmed its losses against other currencies.
The most likely reason for the dollar’s rally is that the minutes mentioned that several policy makers thought that June should be an appropriate date to raise interest rates:
Several participants judged that the economic data and outlook were likely to warrant beginning normalization at the June meeting.
Of course, not all the members of the Board were so bold, and some in fact favored a delay till the next year:
However, others anticipated that the effects of energy price declines and the dollarâs appreciation would continue to weigh on inflation in the near term, suggesting that conditions likely would not be appropriate to begin raising rates until later in the year, and a couple of participants suggested that the economic outlook likely would not call for liftoff until 2016.
The Fed emphasized again that actual timing of a rate lift-off will data dependent.
Talking about data, the latest non-farm payrolls make it very likely that the US central bank will increase borrowing costs later rather than sooner. Still, the minutes suggested that the possibility of an early rate hike remains, allowing the dollar to recover some strength.
EUR/USD ticked down from 1.0813 to 1.0778 as of 21:10 GMT today after rising to the high of 1.0886 earlier. GBP/USD traded at 1.4865 following the jump from 1.4806 to 1.4969. USD/JPY was down from 120.26 to 119.63 before bouncing to trade at 120.13.
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