US Session – Dollar tumbles after dovish Fed minutes
July 10, 2013 7:54 pm
The dollar tumbled against most major counterparts in late U.S. session trading on Wednesday after a much anticipated release of the Federal Reserve June 18-19 policy meeting minutes. Markets were expecting a more hawkish tone, which wasn’t the case.
According to the minutes, several FOMC policy makers said that they would prefer to see an improvement in the U.S. labour markets as well as housing before they would consider tapering stimulus. Many investors, since Bernanke’s talk after the Fed meeting last month, were expecting the Fed to begin tapering stimulus programs by September.
The Fed’s bond buying stimulus program has had a weakening effect on the dollar. So any talk of not beginning to cut back on these purchases will keep the dollar from rising.
The minutes stated the following:
“Many members indicated that further improvement in the outlook for the labor market would be required before it would be appropriate to slow the pace of asset purchases.”
“Some added that they would, as well, need to see more evidence that the projected acceleration in economic activity would occur, before reducing the pace of asset purchases.”
EURUSD shot up at 2pm New York time, hitting as high as $1.2945 from the pre-minutes release at $1.2847. The pair stabilized at $1.2885, up 0.8 percent.
GBPUSD also jumped due to the broadly weaker dollar, up to $1.4992 from $1.4910, before steadying around the $1.4915 support level, up almost half a percent.
The dollar was also down against the yen, with USDJPY falling to as low as 99.60 yen before steadying at 100.17.
The dollar tumbled against most major counterparts in late U.S. session trading on Wednesday after a much anticipated release of the Federal Reserve June 18-19 policy meeting minutes. Markets were expecting a more hawkish tone, which wasn’t the case.
According to the minutes, several FOMC policy makers said that they would prefer to see an improvement in the U.S. labour markets as well as housing before they would consider tapering stimulus. Many investors, since Bernanke’s talk after the Fed meeting last month, were expecting the Fed to begin tapering stimulus programs by September.
The Fed’s bond buying stimulus program has had a weakening effect on the dollar. So any talk of not beginning to cut back on these purchases will keep the dollar from rising.
The minutes stated the following:
“Many members indicated that further improvement in the outlook for the labor market would be required before it would be appropriate to slow the pace of asset purchases.”
“Some added that they would, as well, need to see more evidence that the projected acceleration in economic activity would occur, before reducing the pace of asset purchases.”
EURUSD shot up at 2pm New York time, hitting as high as $1.2945 from the pre-minutes release at $1.2847. The pair stabilized at $1.2885, up 0.8 percent.
GBPUSD also jumped due to the broadly weaker dollar, up to $1.4992 from $1.4910, before steadying around the $1.4915 support level, up almost half a percent.
The dollar was also down against the yen, with USDJPY falling to as low as 99.60 yen before steadying at 100.17.
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