dollar steady, eyes on Fed minutes
Send a link to a friend
[July 09, 2014]
By Patrick Graham
LONDON (Reuters) - The euro
was steady against the dollar on Wednesday, with traders
looking to a speech by European Central Bank chief Mario
Draghi and minutes of the U.S. Federal Reserve's latest
meeting for direction later in the day.
Markets are still waiting for more strongly hawkish signals from the
Fed of higher interest rates next year that many expect will
eventually drive U.S. bond yields higher and the dollar with them.
The euro drew some support from a relatively downbeat assessment of
the pace of U.S. growth from two Federal Reserve officials
overnight. But in a day bereft of top tier data there was little for
traders to get their teeth into.
"Its really been very quiet," said Daragh Maher, a strategist with
HSBC on Monday. "With the minutes today (Fed chair) Janet Yellen was
reasonably dismissive after the meeting of any upside threat in
inflation, so it will be interesting to see if that mood is the same
with others at the Fed."
Against a basket of major currencies, the greenback traded
marginally higher at 80.214. It was almost unchanged against the
euro at $1.3609.
Against the yen, the dollar has fallen all the way back to levels
seen before a strong jobs report last Thursday, hurt by a retreat in
U.S. Treasury yields from last week's highs. It held steady at
101.69 yen on Wednesday.
"I think the contents of the minutes might turn out to be
dollar-positive," said Masafumi Yamamoto, market strategist for
Praevidentia Strategy in Tokyo.
"Whichever data you look at, the inflation rate (in the United
States) has been rising and I'm not sure that can be dismissed as
The New Zealand dollar was trading just off a three-year high of
$0.8819 hit in early trade, steadying after a surge on Tuesday
triggered by improvement in the outlook on one of its sovereign
The kiwi has gained around 9 percent since January on the back of a
steady rise in domestic interest rates; it is the only developed
world economy in which borrowing costs are rising.
[to top of second column]
"There's reasonable momentum in the kiwi," said HSBC's Maher. "I
quite like it against the Australian dollar - the question there is
does it have the strength to break through 105 (cents). It may do."
Analysts at French bank BNP Paribas made a similar recommendation in
a morning note, preferring the kiwi and Canadian dollars over the
"Commodity currencies are performing well despite the backdrop of
weaker equity markets," they said.
"The resilience in carry sentiment owes in part to the perception
that even as stronger U.S. data may push forward the start of the
Fed tightening campaign, the amount of overall rate tightening for
the cycle is likely to be more modest than normal.
"We see CAD outperforming the AUD, particularly if the Bank of
Canada strikes a less dovish tone at next week’s policy meeting."
(Additional reporting by Ian Chua and Masayuki Kitano; Editing by
[© 2014 Thomson Reuters. All rights
2014 Reuters. All rights reserved. This material may not be
published, broadcast, rewritten or redistributed.