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Forex - Dollar Pulls Back but Remains Supported by Rate Hike Talk

ForexFeb 22, 2018 05:15AM ET
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© Reuters. Dollar retreats from session highs but remains supported

Investing.com - The U.S. dollar pulled slightly back but remained near one-and-a-half week highs against other major currencies on Thursday, after the minutes of the Federal Reserve's latest policy meeting boosted expectations for upcoming U.S. rate hikes.

The minutes of the Fed's January policy meeting released on Wednesday showed that central bank officials see increased economic growth and rising inflation as justification to continue to raise interest rates gradually.

The news lent broad support to the greenback despite sustained worries over the U.S. deficit, which is projected to climb near $1 trillion in 2019 following the recent announcement of infrastructure spending and large corporate tax cuts.

The dollar had been pressured lower recently by expectations for a faster pace of monetary tightening outside the U.S., which would lessen the divergence between the Fed and other central banks.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.08% at 89.96 by 05:15 a.m. ET (09:15 GMT), just off a one-and-a-half week high of 90.17 hit overnight.

The euro was higher, with EUR/USD up 0.09% at 1.2295, while GBP/USD fell 0.20% to 1.3890.

Sterling came under pressure after official data showed Britain’s annual economic growth was downwardly revised for the fourth quarter.

In the euro zone, data on Thursday showed that German business confidence deteriorated in February.

Elsewhere, the yen and the Swiss franc were stronger, with USD/JPY down 0.42% at 107.31 and with USD/CHF easing 0.12% to 0.9378.

The Australian and New Zealand dollars were higher, with AUD/USD up 0.19% at 0.7819 and with NZD/USD adding 0.15% to 0.7330.

Meanwhile, USD/CAD slipped 0.16% to trade at 1.2683.

Forex - Dollar Pulls Back but Remains Supported by Rate Hike Talk
 

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