Breaking News
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Dollar Edges Higher; Fed Minutes in Focus

ForexApr 07, 2021 09:05
Saved. See Saved Items.
This article has already been saved in your Saved Items

By Peter Nurse - The dollar edged higher in early European trading Wednesday, but remained near two-week lows after bond yields fell sharply despite further signs of strong U.S. economic growth.

At 2:55 AM ET (0755 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was up 0.1% at 92.390, just above a two-week low of 92.246, slipping further from a five-month high of 93.439 set at the end of last month.

USD/JPY rose 0.1% at 109.78, GBP/USD was down 0.2% at 1.3793, while the risk-sensitive AUD/USD was down 0.2% at 0.7649.

The previous quarter saw the dollar's strongest rally in years on rising expectations that accelerating U.S. economic growth and inflation could force the Fed to abandon its pledge to keep interest rates near zero until 2024.

However, these expectations have been reined in at the start of the new quarter, with EUR/USD rallying to a two-week high of 1.1878, and the benchmark 10-year U.S. Treasury yield dropping sharply to 1.65%.

Yet many investors still question whether the Fed can stick to its dovish stance, particularly given the recent employment data. Friday’s payrolls report was much stronger than expected while Tuesday’s data showed the job market is creating more opportunities at a faster clip than many economists and employers forecast.

“The labor market is probably running hotter than you think and global key figures are now in tightening territory,” said analysts at Nordea, in a note. “Perhaps the Fed’s dual mandate will be fulfilled already by early 2022?”

The market will get a little more insight into what Fed policy makers were thinking about inflation and the current state of the bond-buying program when the minutes of last month's Open Market Committee meeting are released. later Wednesday.

U.S. President Joe Biden on Tuesday moved up the Covid-19 vaccine eligibility target for all American adults to April 19, two weeks earlier than the May 1 deadline he announced previously.

Elsewhere, USD/INR soared 0.8% to 74.065, with the Indian rupee falling to the lowest level since November low after the country’s central bank kept its benchmark repurchase rate at a record low of 4% but cut its cash reverse ratio and also signaled readiness to act to support growth. The RBI said it will keep its accommodative stance for as long as necessary.

In Europe, Poland’s central bank is expected to keep its benchmark interest rate at 0.1% for an 11th straight month later Wednesday, with worries about the economic damage from tighter Covid-19 restrictions set to outweigh rising inflation and a weaker national currency.

USD/PLN rose 0.1% to 3.8716, while EUR/PLN climbed 0.1% to 4.5959. The zloty hit a 10-year low against the euro last week under pressure from record Covid-19 infections - only three months after the central bank had intervened to stop it strengthening against the euro.


Dollar Edges Higher; Fed Minutes in Focus

Related Articles

Dollar Slips After Powell's Dovish Tapering Comments
Dollar Slips After Powell's Dovish Tapering Comments By - Jul 29, 2021

By Peter Nurse - The dollar weakened in early European trading Thursday, falling to two-week lows after further indications that U.S. interest rate hikes are still a...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email