FX Roundup: Dollar sheds froth against global crosses
The dollar corrected against major global currency crosses on Thursday, following the release of minutes from the latest Federal Reserve meeting which indicated the US central bank is set to raise short term interest rates for the first time in almost a decade.
Joshua Mahony, market analyst at IG, said, “The Fed struck a particularly hawkish tone in the minutes released yesterday, providing markets with a strong degree of certainty that we will see a hike in December.
“The meeting took place prior to this month’s bumper jobs report, which highlights that, barring an absolute shocker in December, Janet Yellen and the Fed can achieve the 2015 hike they seek.”
At 1651 GMT, the dollar fell against the yen by another 0.74% changing hands at JPY122.72. Concurrently, the pound rose 0.55% against the dollar exchanging at $1.5321, while the euro rose 0.83% versus the greenback to change hands at $1.0749.
Kit Juckes, head of forex at Societe Generale, said, “The Fed minutes were billed as the biggest news event of the week. In the event, the Fed managed a rare feat - they left the market convinced that they will hike rates in December but equally convinced that it won't be a big deal.
“The US 2-year rates are higher, as the market prices a hike in with increasing confidence, but 10-year yields are a couple of basis points lower, and equity indices are higher. The forex market has taken its cue from others and emerging market currencies lead the way, while the dollar is weaker across the board.”
Commodity linked currency crosses rose across the board with the Australian dollar up 1.35% against its US counterpart exchanging at US$0.7207 reversing the previous session’s gain. The New Zealand dollar rose 1.68% to change hands at US$0.6581. The greenback also fell 0.26% against the Canadian dollar exchanging at CAD$1.3268.
In Latin America, the dollar also fell against the Colombian peso (down 0.90%), Chilean peso (down 0.67%), Mexican peso (up 0.96%) and the Brazilian real (down 0.76%).