Dollar Edges Lower Ahead of Jobless Data
U.S. Dollar Retreats in Early European Trade
The U.S. dollar retreated from a three-week peak in early European trade on Thursday as traders digested the minutes of the Federal Reserve’s December meeting ahead of weekly jobless data. At 04:20 ET (09:20 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.2% lower at 102.017, having hit a three-week peak of 102.73 in the previous session.
Fed’s December Policy Meeting
The minutes of the Fed’s December policy meeting, released late on Wednesday, showed officials were convinced inflation was coming under control and were concerned about the risks of the central bank’s “overly restrictive” monetary policy on the economy. However, they provided little clarity on the timetable for rate cuts this year. “The conditionality attached to cutting rates is hawkish in the sense that it puts pressure on markets to unwind the March easing bets, but the risks flagged to the economic outlook and discussion about exiting quantitative tightening are unequivocally dovish,” said analysts at ING, in a note.
Weekly Jobless Data
Attention will now turn to the weekly jobless data later Thursday, ahead of Friday’s closely watched U.S. report, which will likely give further clarity on how much room the Fed has to lower rates.
Euro and Pound Movement
In Europe, the euro traded 0.2% higher at 1.0947, after the latest figures came in slightly weaker than expected. German regional inflation figures have also started emerging Thursday, with the eurozone-wide CPI release due on Friday. Sterling rose 0.2% to 1.2692, with sentiment towards China dealt a fresh blow by Fitch downgrading the ratings of four major state-backed asset managers, and placing three of them on watch for more cuts.
Yen and Chinese Yuan
Elsewhere, the yen traded 0.3% higher to 143.74, with the yen weakening after purchasing managers index data showed that Japanese economic activity remained fragile, as the Chinese yuan remained in contraction in December.
