WASHINGTON/LONDON: The dollar index was off a two-month high Thursday after Federal Reserve meeting minutes left the door open for more rate hikes and data this week indicated a resilient US economy.
The Norwegian crown rose from six-week lows against the dollar and the euro on Thursday after Norges Bank raised interest rates, as expected, and said it was likely to hike again in September.
The US dollar index was 0.145% lower on the day at 103.300, after hitting a two-month high of 103.59.
The greenback has drawn support from a recent run of US economic data reinforcing the view that interest rates will remain high for some time.
Rupee stable against dollar at 294.92 in inter-bank market
Data on Wednesday showed that US single-family home building surged in July and permits for future construction rose, while a separate report said production at US factories unexpectedly rebounded last month.
Minutes of the Fed’s July policy meeting showed officials were divided over the need for more rate hikes last month, citing the risks to the economy if rates were pushed too far.
“When you come back to the Fed minutes, there is a case for the Fed to hike again in November, but I don’t think the market wants to trade around November just yet,” said Adam Button, chief currency analyst at ForexLive. “There’s so much data between then and now.”
Against the dollar, the Norwegian crown was last up 0.79% to 10.54, having hit 10.66 earlier in the session.
“We do not see the Norges Bank as finished hiking yet and a September rate hike seems all but certain,” said Nick Rees, FX Market Analyst at Monex Europe. Inflation, at 6.4% year-on-year in July, remains too hot for comfort, he added.
Data dependent
The Australian dollar steadied after sinking to a nine-month low, taking its New Zealand counterpart along with it, on data showing that Australia’s employment unexpectedly fell in July while the jobless rate ticked higher.
The Australian dollar was last 0.05% lower at $0.642, having tumbled more than 0.9% to a trough of $0.6365 following the employment data release. The kiwi fell 0.06% to $0.593 after touching its lowest level since November.
The two antipodean currencies, often used as liquid proxies for the yuan, have also taken a beating over the past few sessions as a result of the darkening outlook over China’s economy.
Elsewhere, the yen edged 0.15% higher to 146.10 after weakening to 146.56 per dollar, its lowest level since November, having come under renewed pressure as a result of interest rate differentials between the US and Japan’s ultra-low rate environment.
The Japanese currency is being closely watched since it touched the key 145 level for the first time in about nine months last Friday, crossing into a zone that sparked an intervention by Japanese authorities in September and October last year.
The euro was up 0.11% to $1.08895, after falling to a six-week low at $1.0862. Sterling was last trading at $1.2754, up 0.17% on the day, after surging on Wednesday on British inflation data.
Despite a sharp drop in Britain’s headline inflation rate, key measures of price growth monitored by the Bank of England (BoE) failed to ease in July, boosting bets the BoE will keep rates higher for longer.
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