Dollar rebounds after Fed minutes coy on policy strategy By Reuters

By Tom Westbrook

SINGAPORE (Reuters) – The dollar climbed on Thursday night on Thursday, after minutes of last month’s US Federal Reserve meeting gave some clues as to whether an even deeper shift in its policy framework is possible in the fall, what disappointing dollar children.

A severely shortened greenback set its biggest end-of-day experience since March after its release, hitting 93,159 against a currency exchange rate (), about 1% above Tuesday’s two-year trough. The move eliminates previous gains made by other majors.

Speculation is widespread the Fed will adopt an average inflation target, trying to push inflation above 2% to make it run below it for years, as part of a broader policy review.

But the minutes were vague on the issue and said only “a number” of Fed members thought it would be useful to make a revised statement on their policy strategy at some point, without providing details or timing.

After hitting an 18-month high of $ 0.7275 for the meeting, the Australian dollar tumbled back below 72 cents and sat last at $ 0.7186. The New Zealand dollar dropped nearly 1.4% of its intraday high to sit at $ 0.661.

The euro – the most widely used of all recent greenback gainers – fell 0.7% overnight to trade back below $ 1.19. It last sat at $ 1.1841 (). The pound was dumped back to $ 1.3103 and the dollar jumped 0.7% on the yen to 106.13.

“Traders are hoping (the minutes) to cement a clear consensus in the ranks of the Fed for a series of key changes at the September 18 meeting,” said Pepperstone chief investigator Chris Weston.

“(But) there seems to be little consensus in the Fed collective to adopt an inflation-oriented regime, which is what so many have positioned for.”

The minutes also sounded rather bleak about the U.S. economy and skeptical about revamping government bond yields as a means to encourage recovery and investment – leading to modest sales in Treasury.

The handball of the dollar comes after short matches against the world reserve currency have increased to their greatest since 2011 last week and long bets on the euro were at a record high, which has some investors feeling that it could be short-lived.

“All it took to support the dollar was a catalyst; the minutes provided the catalyst,” said Commonwealth Bank of Australia (OTC 🙂 analyst Joe Capurso.

“Nevertheless, we still expect the dollar to follow lower. The rest of the world economy, led by China, has recovered … we view the fall of the night as a short-term pothole along a path that is trending higher. . “

For the Fed, the focus now shifted to whether more will be announced on Aug. 27-28. Virtual Jackson Hole symposium as at the September meeting.

On Thursday, investors expect China to keep its benchmark lending rate stable if it is fixed at 0130 GMT.

Later in the day, U.S. weekly unemployment claims are expected to fall even higher below one million, and markets wait at 1230 GMT for the Philadelphia Fed Business Index after a disappointing reading from New York earlier this week.