NEW YORK: The US dollar fell across the board on Wednesday, after data showed US business activity weakened further in November and as traders remained on edge ahead of the impending release of minutes from the Federal Reserve’s November meeting.
“Fed minutes will be the focus for today,” said Brad Bechtel, global head of FX at Jefferies.
“This is the meeting where Powell had a relatively hawkish press conference in which he indicated that if there had been an SEP (Summary of Economic Projections) at this meeting they would have definitely come out with a higher terminal rate. So the meeting minutes are likely to get into detail around this concept and therefore come with a hawkish bent,” Bechtel said.
After a headlong rush this year to raise interest rates, the Fed switched this month to a more nuanced approach that was seen as a compromise between officials most concerned about high inflation and others worried that more large rises in borrowing costs might crater the economy or stress key markets.
The minutes of the Nov. 1-2 policy meeting, scheduled to be released later on Wednesday, may show just how deep any emerging disagreement has begun to run at the US central bank as it ends the push to “front-load” rate increases and begins feeling the way in smaller steps to an eventual stopping point.
The euro rose 0.6% against the dollar to $1.0362, on pace for a second straight session of gains.
US business activity contracted for a fifth straight month in November, with a measure of new orders dropping to its lowest level in 2-1/2 years as higher interest rates slowed demand.
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