The USD rose at the beginning of Thursday’s trading session, trading at its one-and-a-half-week high against other major currencies.
This came right after a set of gains made by the dollar yesterday evening, especially after the minutes of Fed meetings held in January. This confirmed the expectations of higher US interest rates faster. The minutes of the Federal Reserve’s monetary policy meeting from January 30 to 31 showed that growing confidence among US policymakers backed their plans to continue raising short-term interest rates, as early as next month. The minutes also noted that the majority of participants believe that the idea of a strong economic growth increases the possibility of further gradual monetary policy tightening.
The dollar index, which measures the strength of the currency against six major currencies, traded at 90.11 points, having earlier reached a high of 90.17 points, its highest level since February 12. The index is now 2% higher after falling to a three-year low of 88.15 last week. The euro fell to its lowest level against the dollar since February 12, with the EUR / USD pair down by 0.46%, at $1.2276 a euro.
The USD remained bearish against the Japanese yen, dropping by 0.29%, with the USD / JPY pair trading at 107.45 yen per dollar. This may be due to increased demand for the yen as a safe haven, as expectations of a faster monetary tightening by the Federal Reserve led to a decline in equities. Investors tend to look for the Yen in times of market turmoil, as the currency is supported by Japan’s current account surplus, thus providing greater currency flexibility in countries with deficits. The euro also fell against the yen, with EUR / JPY shedding 0.37% to hit 131.89 yen per euro.
The British pound fell by 0.24% against the US dollar, to hit its lowest level in a week, with GBP / USD trading at $1.3884 per pound. The pound also stabilized largely against the single European currency.
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