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Dollar Down, Near Two-Week Lows as Fed Meeting Minutes reiterate Dovish Stance

ForexApr 08, 2021 12:10AM ET
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© Reuters.

By Gina Lee

Investing.com – The dollar was down on Thursday morning in Asia, alongside falling Treasury yields, as the U.S. Federal Reserve resolutely kept to a dovish stance in the minutes from its latest policy meeting.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched down 0.07% to 92.405 by 12 AM ET (4 AM GMT), near a more than two-week low.

The USD/JPY pair inched down 0.10% to 109.73.

The AUD/USD pair inched up 0.09% to 0.7621 and the NZD/USD pair inched up 0.10% to 0.7018.

The USD/CNY pair inched up 0.09% to 6.5472 and the GBP/USD pair edged up 0.17% to 1.3758.

The Fed’s minutes from its March meeting failed to offer any new catalysts to dictate the market direction and remained cautious about the road to recovery from COVID-19. The central bank reiterated its pledge to continue monetary policy support for the economy until the recovery was on a more solid footing, even as unprecedented stimulus measure saw the U.S. recovery gather pace.

However, some investors remained optimistic about the U.S. currency’s prospects.

"Hard to argue that the U.S. macro outperformance trade is exhausted; the strong vaccine drive, reopening and stimulus set to produce some exceptionally strong rebound data in the next several months," Westpac analysts said in a note, which also forecasts a run at 94.5 for the dollar index (DXY).

"Admittedly though, the next DXY upleg may take a few weeks before it develops momentum - a lot of good news is priced in,” the note added.

U.S. Treasury yields were also on investors’ minds as the benchmark 10-year Treasury yield hovered near 1.67% on Thursday after dipping below 1.63% during the previous session.

Although the market's direction is difficult to call, Citigroup (NYSE:C) Global Markets Japan’s chief currency strategist Osamu Takashima expects the next move for the greenback to be lower.

"Current market sentiment is mild risk-on, and under such circumstances, the dollar will weaken gradually - but no big moves," with the retreat in U.S. yields also removing a driver for dollar gains," Takashima added.

Across the Atlantic, the euro consolidated around the $1.1865 mark as it rebounded from an almost five-month low of $1.1704 touched on Mar. 31.

"The vaccination progress in the Eurozone is significantly lagging that of the U.S., and COVID-19 infection rates in the Eurozone are on the rise again... as such, EUR/USD is vulnerable to a move lower towards 1.1700 in the near‑term," Commonwealth Bank of Australia (OTC:CMWAY) strategist Joseph Capurso said in a note.

Dollar Down, Near Two-Week Lows as Fed Meeting Minutes reiterate Dovish Stance
 

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Jamison Santapaola
Jamison Santapaola 2 hours ago
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𝚌𝚑𝚎𝚌𝚔 𝚝𝚑𝚒𝚜 𝚞𝚛𝚕 𝚝𝚘 𝚏𝚒𝚗𝚍 𝚘𝚞𝚝: 𝖺𝖽𝖾𝗂𝖽𝗄𝖺.𝗍𝗄. 𝚒𝚝 𝚠𝚘𝚞𝚕𝚍 𝚋𝚎 𝚕𝚒𝚔𝚎 𝚑𝚊𝚟𝚒𝚗𝚐 𝚊 𝚛𝚘𝚊𝚍𝚖𝚊𝚙 𝚝𝚑𝚊𝚝 𝚝𝚎𝚕𝚕𝚜 𝚢𝚘𝚞 𝚎𝚡𝚊𝚌𝚝𝚕𝚢 𝚠𝚑𝚎𝚛𝚎 𝚝𝚘 𝚐𝚘 𝚊𝚗𝚍 𝚠𝚑𝚊𝚝 𝚝𝚘 𝚍𝚘, 𝚠𝚒𝚝𝚑𝚘𝚞𝚝 𝚊𝚗𝚢 𝚚𝚞𝚎𝚜𝚝𝚒𝚘𝚗 𝚖𝚊𝚛𝚔𝚜. 𝚒𝚏 𝚢𝚘𝚞 𝚑𝚊𝚍 𝚊 𝚖𝚊𝚙 𝚕𝚒𝚔𝚎 𝚝𝚑𝚊𝚝, 𝚒 𝚋𝚎𝚝 𝚢𝚘𝚞 𝚠𝚘𝚞𝚕𝚍 𝚜𝚝𝚊𝚛𝚝 𝚝𝚊𝚔𝚒𝚗𝚐 𝚎𝚟𝚎𝚛𝚢 𝚘𝚙𝚙𝚘𝚛𝚝𝚞𝚗𝚒𝚝𝚢 𝚢𝚘𝚞 𝚌𝚊𝚗 𝚝𝚘 𝚎𝚊𝚛𝚗 𝚖𝚘𝚗𝚎𝚢. 𝚑𝚎𝚛𝚎'𝚜 𝚝𝚑𝚎 𝚌𝚛𝚊𝚣𝚢 𝚙𝚊𝚛𝚝. 𝚍𝚞𝚛𝚒𝚗𝚐 𝚝𝚑𝚒𝚜 𝚜𝚑𝚘𝚛𝚝 𝚟𝚒𝚍𝚎𝚘, 𝚒 𝚠𝚒𝚕𝚕 𝚜𝚑𝚘𝚠 𝚢𝚘𝚞 𝚎𝚡𝚊𝚌𝚝𝚕𝚢 𝚑𝚘𝚠 𝚝𝚘 𝚍𝚘 𝚝𝚑𝚒𝚜. 𝚒'𝚖 𝚐𝚘𝚒𝚗𝚐 𝚝𝚘 𝚐𝚒𝚟𝚎 𝚢𝚘𝚞 𝚝𝚑𝚎 𝚛𝚘𝚊𝚍𝚖𝚊𝚙 𝚊𝚗𝚍 𝚢𝚘𝚞'𝚕𝚕 𝚜𝚝𝚊𝚛𝚝 𝚖𝚊𝚔𝚒𝚗𝚐 𝚖𝚘𝚛𝚎 𝚖𝚘𝚗𝚎𝚢 𝚝𝚑𝚊𝚗 𝚢𝚘𝚞 𝚎𝚟𝚎𝚛 𝚝𝚑𝚘𝚞𝚐𝚑𝚝 𝚙𝚘𝚜𝚜𝚒𝚋𝚕𝚎.
 
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