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US Dollar Weaker Ahead of FOMC Minutes

H.S. Borji
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US Dollar Weaker Ahead of FOMC Minutes

The US dollar was weaker across the board Tuesday, as commodity currencies strengthened ahead of last month’s Federal Open Market Committee meeting minutes.

The greenback declined more than 1.1 percent versus the Japanese yen, which rallied after the Bank of Japan announced no plans to increase record stimulus this month. The decision told off on additional stimulus suggests the economy can withstand any short-term disruptions due to last week’s sales tax hike. The USDJPY fell to a low of 101.9170 in North America’s afternoon session, down more than 1.1 percent.

The euro strengthened amid speculation the European Central Bank would continue to weigh unconventional policy measures to stimulus growth. The EURUSD was trading at 1.3798 in North America’s afternoon session, up 0.4 percent.

Pound Sterling rallied more than 0.8 percent to 1.6743 US after a slew of data reaffirmed the solid pace of UK recovery. UK manufacturing production rose 3.8 percent annually in February, while industrial production rose 2.7 percent over the same period.

The Canadian dollar peaked at a high of 0.9163 US amid signs Canada’s housing sector was beginning to stabilize. The loonie consolidated at 0.9153 US, up more than 0.4 percent.

A lack of compelling data releases in the US will keep the forex market glued to the minutes of the latest FOMC policy meetings, which are scheduled for release Wednesday. The central bank in March decided to taper bond purchases by another $10 billion and announce it expects to wrap up record stimulus this year, paving the way for the first rate hike in 2015. The minutes could reveal important insights about policymakers’ inflation outlook. Fed officials believe inflation will reach 1 percent by the end of 2015 and 2.25 percent the year after that.

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