The world’s most powerful currency slipped slightly in early European trade on Thursday, having spent the week gradually edging away from two-month highs hit after the Fed’s surprise hawkish shift at its meeting last week. Currency markets were quiet as traders digested different signals from Fed officials on the timing of a withdrawal of monetary stimulus. The dollar index fell to 91.738 at 07:15 GMT. It pared back some gains after hitting a two-month high of 92.408 on Friday.
The euro added 0.1% against the dollar to $1.1939. The risk-sensitive Australian dollar was flat on the day at $0.75745.
The greenback fell 0.1% against the Japanese yen after the pair hit a 15-month high of 111.11 on Wednesday.
The British pound was a touch lower in early London trading, down 0.1% at $1.3962 and 85.495 pence per euro. Analysts are investors are monitoring the Bank of England meeting. Market attention is focused on the central bank’s meeting and policy announcement at 11:00 GMT. Investors are not expecting any policy changes, but they are looking for any hints that BoE will follow in the Fed’s footsteps as inflation pressures mount.
Andrew Haldane is the current chief economist and executive director of monetary analysis and statistics of BoE. He is likely to vote again to scale back the bond-buying program at his final meeting before leaving the central bank.
Bitcoin dropped around 2% to $33,000. This cryptocurrency recovered somewhat from when it declined to $28,600 two days ago. Ether which is another important cryptocurrency was trading at $1,900.
Dollar and Fed officials
The dollar got some support from two Fed officials. On Wednesday Atlanta Fed President Raphael Bostic and Fed Governor Michelle Bowman stated that a period of higher inflation in the country could last longer than expected.
Atlanta Fed President Raphael Bostic expects the interest rates will need to rise in 2022. That marked a decisive shift from the end of the last year. At that time 12 Fed policymakers felt that crisis levels of interest rates would need to remain in place into 2024.
But, two days ago Fed Chair Jerome Powell said that price pressures should ease on their own.
Six Fed officials are due to speak on Thursday including John Williams, New York Fed President. On Tuesday, John Williams said any conversation about when to adjust interest rates is still far off.