Forex-Dollar bounces after Fed minutes reopens discussion
* Chart: global exchange rates tmsnrt.rs/2RBWI5E
TOKYO, May 20 (Reuters) – The dollar rebounded Thursday after three months against European currencies after minutes from the Federal Reserve’s latest policy meeting revealed that it was more about cutting their bond purchase than the investors never thought so.
In the Fed minutes, several policymakers said a discussion of reducing the pace of asset purchases would be appropriate “at some point” if the economic recovery continues to gain momentum.
This surprised investors, given that Fed Chairman Jerome Powell said right after that meeting last month that it was not yet time to start discussing a policy change.
“The minutes contained wording that appears to seek to start the discussion on the reduction earlier than expected,” said Takafumi Yamawaki, head of fixed income research at JPMorgan.
“If the next jobs data expected on June 3 is strong, markets will start to prepare for the Fed to make specific mention of the cut at its next meeting in June.”
The euro slipped to $ 1.2174 after a three-month high of $ 1.2245 on Wednesday.
The dollar rose to 109.21 yen after a one-week low of 108.575 yen hit on Wednesday.
The British pound slipped to $ 1.4117 above $ 1.42 earlier this week.
The dollar index rebounded from Wednesday’s three-month low to 90.209.
The dollar has fallen in recent weeks, with key Fed officials repeatedly saying they are not ready to discuss reducing stimulus measures, believing spikes in inflation to be transient.
“Interestingly, the FOMC minutes predate the latest CPI and payroll / earnings figures, so the fears of the FOMC minority have likely grown a bit more acute since the meeting. April, “said Tapas Strickland, director of economics. , markets at RBA in Sydney.
The Fed minutes lifted US bond yields a bit, the 10-year Treasury yield to 1.671%, from around 1.65% just before the minutes were released.
Cryptocurrencies were volatile after suffering one of their biggest losses on Wednesday following China’s decision to ban financial and payment institutions from providing digital currency services.
Bitcoin last fell 3% to $ 35,654, after falling to $ 30,066 on Wednesday, which was a whopping 54% drop from its all-time high just over a month ago.
Ether plunged more than 10% to $ 2,168 after falling 22.8% on Wednesday, its biggest daily drop since March 2020.
Reporting by Hideyuki Sano; Editing by Sam Holmes