HONG KONG: The dollar struggled Thursday in Asia following the previous day's losses as dovish Federal Reserve minutes rowed back expectations for US interest rate hikes.
While board members at the US central bank will likely lift borrowing costs next month, official records of their October meeting indicate some are increasingly concerned about persistently low inflation as well as high equity prices.
The release of the minutes came after data showing a surprise drop in key durable goods orders, fuelling a sell-off in the greenback across the board. They also came out a day after Fed boss Janet Yellen had warned that too quick an increase in rates could cause inflation to stagnate well below the bank's two percent target rate.
"The minutes reflected a continued push toward another rate hike because of economic strength and a tight labour market," Greg McKenna, chief market strategist at AxiTrader, said. "But like Fed chair Janet Yellen... the minutes also reflected the Fed's concern that inflation may stay lower for longer. That suggests calls for three and four hikes next year may be misplaced."
Expectations that rates would be lifted several times next year -- partly through an improving economy and flagged tax cuts -- helped drive the dollar up over the past year.
In Asian trade Thursday the dollar was flat against the yen, euro and pound, having tumbled against all three on Wednesday.
But higher-yielding units were well up. The Australian dollar 0.9 percent up and the Canadian dollar rising 0.4 percent, with both commodity-reliant currencies boosted by a recent jump in oil prices.
South Korea's won added 0.4 percent, the Mexican peso jumped 0.8 percent and the Indonesian rupiah was 0.2 percent higher while India's rupee strengthened 0.3 percent. The Singapore dollar, Malaysian ringgit and New Zealand dollar were also sharply higher.
Comments
Comments are closed for this article.