Dollar hits low in response to lowering yields
By Daisy Joseph
After a strong surge in the value of US dollar, the currency experienced a weakness on Thursday. The minutes of Federal Reserve’s December meeting showed the hawkish trend of the Fed. While the Fed said earlier that the interest rates will be increased thrice, the December minutes portrayed a wait and see approach. The Fed pointed out that there are numerous risks to the economy that can result in changes in interest rates.
The policy makers remained unsure about the proposed fiscal stimulus policy of Donald Trump. There were worried that the strengthening of the dollar combined with the weakening of other currencies could result in a hindrance to the economic growth. The ICE dollar index lowered to 1.1%. Greenback also hit lower against the major foreign currencies.
Yen rose against the dollar as the dollar fell from 116.64 yen to 115.6 yen. The EURUSD pair increased from $1.0526 to 1.0592 on Thursday. The dollar reached its new one-month low due to the slow approach of the Fed. The dollar is also not supported by the US labor data. While the weekly jobless claims reduced to reach a near 43 year low, the hiring slowed down.
Experts agree that dollar has slowed down after its high rally. Investors won’t be interested in taking new aggressive positions after the Fed minutes. According to the Fed, if the risks increase, the economic policy may take a different path that what was anticipated. This resulted in US bond yields reaching a new low within a night.
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