Fed Minutes Helped U.S Dollar to Reach Great Results

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Dollar and its main peers

On Thursday, the U.S. dollar rose to a nine-month high against its main peers, on expectations that the central bank will start tapering its huge stimulus this year.

 

The U.S. dollar index, which measures the greenback against six rivals, rose as high as 93.502 on Thursday. The index rose to its highest point since November 5, before trading 0.26% higher at 93.464.

 

In minutes of the Federal Open Market Committee’s (FOMC) meeting, Fed officials saw the potential to ease bond-buying stimulus in 2021 if the economy continues to improve as expected. Analysts, as well as investors, are waiting for the Federal Reserve’s annual symposium. Some analysts expect the central bank to announce tapering in September, followed by implementation in October or November.

 

Euro, yen, dollar, and other currencies

The euro declined as low as $1.16655 for the first time since November 4. The Australian dollar fell to $0.7198, a level not seen since November 5. The New Zealand dollar dropped to $0.68465, the weakest since November 13.

 

Strategists for Westpac wrote in a client note that the Australian dollar remains in a powerful four-month downtrend. According to strategists, it may decline to $0.70 while the kiwi eyes drop to $0.68, although it should rise later in the year.

 

The kiwi lost support one day earlier. That was after the country’s central bank delayed becoming the first G10 central bank to raise interest rates during the pandemic. The Reserve Bank of New Zealand’s Governor Adrian Orr expressed his opinion on Thursday. Orr still sees the official cash rate systematically increasing towards a more neutral level over the next year and a half.

 

The Covid-19 cases in New Zealand jumped to 21 on Thursday. But authorities said the virus might not have been in the community for long as they linked its origin to a recent returnee from Sydney.

 

Despite strict lockdown, New South Wales reported record infections for a second day on Thursday. An unexpected decline in Australia’s unemployment rate to 4.6% in July only lifted the Australian dollar for a short period of time.

 

The U.S. currency rose as high as 110.225 yen.

 

The British pound touched a four-week low of $1.3712. The Canadian dollar also reached a four-week low of C$1.2699 per greenback.

 

China’s yuan also suffered losses, as it fell to a three-week low in offshore trading of 6.4996 per dollar.

 

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