Forex - Dollar rises Federal Reserve minutes offer little policy clarity

Published 07/11/2012, 09:56 PM
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Investing.com - The dollar traded mixed to higher against major global currencies on Thursday, after the Federal Reserve released the minutes of its June monetary policy meeting, which revealed the Fed made no real changes to its wait-and-see approach to stimulating the economy.

In Asian trading on Thursday, EUR/USD was trading down 0.03% at 1.2237.

In the U.S. on Wednesday, the Federal Reserve released the minutes of its June 19-20 monetary policy meeting, in which the U.S. central bank largely reiterated that it will be willing to intervene and stimulate the economy but only if the country takes a more marked turn for the worse.

Markets were expecting hints the Fed would act more aggressively to prop up the economy in wake of poor jobs reports and other economic indicators, which would have weakened the U.S. currency.

"A few members expressed the view that further policy stimulus likely would be necessary to promote satisfactory growth in employment and to ensure that the inflation rate would be at the Committee's goal," the Federal Reserve said in the minutes released in the U.S. on Wednesday.

"Several others noted that additional policy action could be warranted if the economic recovery were to lose momentum, if the downside risks to the forecast became sufficiently pronounced, or if inflation seemed likely to run persistently below the Committee's longer-run objective."  

The dollar rose on the report, as monetary stimulus tools such as quantitative easing — bond buybacks from banks — weaken the greenback to spur recovery.

Elsewhere in Europe, a German court put off deciding on whether or not participating in bailouts and other eurozone rescue measures violated national law, which gave currency markets time to relax.

In Spain, meanwhile, the government rolled out a EUR65 billion austerity plan, which bolstered the euro somewhat, though optimism from the announcement was short-lived on sentiment that austerity measures will prolong Spain's recession.

Yields fell in German bond markets earlier as investors flocked to the safety of German debt on sentiment the debt crisis remains far from being contained.

The Bank of Japan is expected to make no changes to its monetary policies later, including to its stimulus programs, which sent many investors snapping up yen positions at the dollar's expense.

The greenback, meanwhile, was down slightly against the pound, with GBP/USD trading up 0.01% at 1.5505.

The dollar was down against the yen, with USD/JPY trading down 0.14% at 79.65, and up against the Swiss franc, with USD/CHF trading up 0.08% at 0.9818.

The dollar was up against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.01% at 1.0207, AUD/USD down 0.54% at 1.0195 and NZD/USD down 0.40% at 0.7933.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.08% at 83.69.

Later Thursday, the U.S. will release weekly data on unemployment claims and figures on import prices, followed by the monthly Treasury statement.







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