TVC NEWS The dollar sagged on Thursday after minutes from the Federal Reserve’s July meeting showed more policy members opposed a near-term rate hike than supported it.
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The Bloomberg Dollar Spot Index, which tracks the currency against 10 peers, fell 0.6 per cent as of 5pm in NY.
Benchmark 10-year note yields fell three basis points, or 0.03 percentage point, to 1.55 percent as of 4:04 p.m.in NY, according to Bloomberg Bond Trader data.
Minutes from the Fed’s July policy meeting shows consensus that labor market conditions have improved since May, and that economic activity continues to expand at a moderate pace.
Officials anxious about the fallout from Britain’s vote, and while they were not ready to take action just yet, they left open the door for new stimulus, possibly as soon as September.
There were significant divisions within the committee with some members pushing for an early move to raise rates with confidence that the Fed was very close to meeting its objectives.
Seventeen Fed policymakers participated in the July meeting, 10 of whom had a vote.
Analyst Norman Levine said the market’s non-reaction to the Fed minutes confirms that not much was expected out of the release.
USA money market futures showed traders reducing bets on the timing of rate hikes. Fed Bank of New York President William Dudley said this week that the central bank could potentially raise rates as soon as September, speaking in an interview with Fox Business Network.
In response, investors snapped up European bonds, sending yields lower. After liftoff from near zero in December, officials have twice cut their projections for the path of rates this year, as improving US economic data contrast with signs of slowing growth overseas.
“There is a little bit of unwinding of the positions and some prudence and caution creeping into the markets, ahead of the Fed minutes”, said Larry Hatheway, chief economist at GAM Holding AG.
The euro hit a session high of $1.1356 and the dollar touched a session low against the franc of 0.9540 franc.
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The U.S. dollar strengthened after the release of the minutes, while U.S. stocks and prices of shorter-dated U.S. Treasuries pared losses. Crude prices remained steady as investors are anxious that Saudi Arabia was cranking output to record highs even as OPEC talked of ways to ease a global glut. India’s Sensex rose 0.6 percent to 28,166.50 and benchmarks in Taiwan, Thailand and Indonesia also gained.
