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Can FOMC Minutes Boost Struggling Greenback?

H.S. Borji
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Can FOMC Minutes Boost Struggling Greenback?

The US dollar suffered a broad selloff Tuesday, as commodity currencies and other global safe havens gained traction ahead of the release of the Federal Open Market Committee meeting minutes.

In March the FOMC disregarded the weather-induced slowdown that hampered economic activity in the early part of the year, deciding to pare asset purchasing by another $10 billion. Fed Chair Janet Yellen also outlined a tentative timeline for eliminating federal stimulus, paving the way for the first rate hike sometime in 2015.

The March meetings signified a pronounced shift among Fed policymakers, who forecast interest rates to rise to 1 percent at the end of 2015 and 2.25 percent in 2016. The conversation is expected to shed further clarity on the central bank’s increasingly hawkish policy stance.

The Federal Reserve will introduce the first rate hike in the third quarter of 2015, the International Monetary Fund said Tuesday in its revised World Economic Outlook report. Yellen announced last month the central bank may hike interest rates six months after ending its record bond buying program.

In the early North American session, the US dollar index was at 79.79, relatively unchanged from the previous close. A dearth of high profile economic data from the US will keep investors glued to the FOMC minutes, which could provide temporary reprieve for the US dollar.

The EURUSD was relatively unchanged at 1.3801 after Germany posted disappointing trade data. German exports declined 1.3 percent in February, the Federal Statistics Office reported today.

The GBPUSD extended its gains, rising 12 pips to 1.6760. The pair has gained more than 1 percent since Monday.

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