Dollars rises further after release of hawkish' FOMC minutes
The greenback rose against other major currencies on Wednesday, as minutes from the U.S. central bank's April policy meeting showed that the Federal Reserve will likely raise interest rates in June if economic data points to stronger second-quarter growth as well as firming inflation and employment.
Versus the Japanese yen, although dollar came under renewed selling pressure at 109.25 ahead of Asian open and then fell to 108.72 in Tokyo morning, renewed broad-based selling in yen lifted price to 109.61 in European morning. Later, price found support at 109.30 and rose to a fresh 2-week peak at 109.84 in New York morning before easing. In New York afternoon, dollar rose again to a fresh session high of 110.05 as FOMC minutes showed that Fed signals interest rate hike firmly on the table for June.
Fed minutes stated on Wednesday, 'most U.S. federal reserve policymakers judged it would likely be appropriate to raise interest rates in June if data remains consistent with Q2 GDP pickup, firmer labor market conditions and progress on inflation; some policymakers expressed concern that financial markets may not have accurately assessed the chance of a June rate hike, emphasized importance of central bank clearly communicating how it will respond to incoming data; policymakers expressed range of views on whether there would be enough incoming data to warrant June rate hike; several policymakers judged risks to U.S. economic outlook as now roughly balanced; many others continued to see downside risks; some policymakers noted global financial markets could be sensitive to upcoming British referendum on EU membership or unanticipated developments due to China's management of its exchange rate; a few policymakers saw it as appropriate to increase rates at April meeting; two worried that U.S. central bank was behind curve on inflation; many policymakers expressed confidence that U.S. economic growth would pick up in subsequent quarters; some saw risk that more persistent slowdown under way; a number of policymakers said risks to inflation outlook remained tilted to downsidel; many policymakers saw recent data as providing greater confidence that inflation rate would rise to central bank's 2 percent target over the medium-term; several policymakers said there is ongoing need to remain alert to vulnerabilities in the financial system, cited concerns about rapidly rising commercial real estate prices and illiquid assets in some mutual funds; policymakers generally saw risks from global economic and financial developments as having diminished, but still warranted close monitoring; participants generally agreed that fed should not completely rule out possibility of using monetary policy to address financial stability risks.'
The single currency moved sideways in Asian morning before renewed selling interest pressuring price to 1.1283 in Asian morning, then 1.1256 in early European. Later, price rebounded to 1.1289 at European morning and then marginally higher to 1.1290 due to buying interest in euro especially versus yen before moving sideways in subdued New York morning session. In New York afternoon, price fell again to a fresh session low of 1.1223 following the release of 'hawkish' FOMC minutes.
Although the British pound ratcheted lower against the greenback in Asian morning and fell to a session low 1.4403 in European morning after a briefly gain to 1.4454 as investors shrugged off a solid U.K. jobs report. Renewed buying interested lifted price from there and cable later rallied to as high as 1.4625 in New York morning after news the 'Remain' camp is taking a big lead over the 'Brexit' before easing. In New York afternoon, price retreated after following the release of 'hawkish' FOMC minutes.
The Office for National Statistics reported that the claimant count, which measures the number of people receiving unemployment benefit, fell by 2,400 in April, against expectations for an increase of 4,300. Claimant count in March was revised up to 14,700, the biggest monthly increase since September 2011. The U.K. unemployment rate remained stable at 5.1%, in line with economists’ forecasts. The number of people in work rose by 44,000, bringing the employment rate to a record high of 74.2%. In a separate report, data showed that wage growth in U.K. continued to pick up, with average weekly earnings rising by 2.0% in the last three months, up from 1.9% in the three months to December.
In other news, Reuters reported support for Britain to stay in the European Union has risen to its highest in three months, London's Evening Standard newspaper said on Wednesday after commissioning a poll from Ipsos-Mori. The newspaper said Ipsos-Mori found 55 percent of those surveyed supported staying in the EU, while 37 percent wanted to leave, just over a month before the June 23 referendum.
Data to be released on Thursday:
Japan's Machinery Orders, Australia's jobs reports, China's MNI Business Sentiment, Japan's All Industry Index, France's ILO Unemployment, UK's Retail Sales, ECB's Monetary Policy Meeting Account, U.S.'s Initial Jobless Claims.