© Reuters. FILE PHOTO: A woman counts U.S. dollar bills in August 28
By Vatsal Srivastava
SINGAPORE (Reuters) – The dollar traded stronger versus its major peers on Thursday after minutes from the U.S. Federal Reserve’s September meeting affirmed expectations that the central bank is likely to continue raising interest rates this year.
Every Fed policymaker backed raising interest rates last month and also generally agreed borrowing costs were set to rise further.
Interest rate futures are now pricing in an 83 percent likelihood that the Fed raises rates in December, according to the CME Group’s FedWatch Tool, the fourth hike this year. Two more increases are likely next year.
The (), which measures its value against six major peers, traded at 95.664, up 0.1 percent on Thursday.
“The dollar is being bid as there is follow through support post the release of the FOMC minutes,” said Ray Attrill, head of currency strategy at NAB.
“Dollar bulls are playing to the view that the market is under-pricing what the U.S. Fed can do,” added Attrill.
U.S. benchmark 10-year treasury yields
The euro () changed hands at $1.1501 on Thursday.
The British pound lost 0.12 percent versus the dollar on Thursday to $1.3096, weakening after European Union’s chief Brexit negotiator Michel Barnier’s comments on Wednesday that more time was needed to secure an exit deal for Britain.
The Canadian dollar
The Japanese yen
The yen changed hands at 112.65 to the dollar on Thursday. The dollar has gained 0.9 percent versus the yen since Monday, when the yen hit a one-month high of 111.61.
The Australian dollar, often considered a barometer of global risk appetite, changed hands at $0.7126 on Thursday, gaining 0.24 percent versus the greenback on the back of a strong unemployment report.
The hit a two-year low of $0.7039 on Oct. 5 and analysts still expect the currency to remain under pressure.
“The combination of a strengthening U.S. dollar and commodity price pressures could bring a test of the two-year low around $0.7040 in the coming sessions,” said Sydney based Michael McCarthy, chief market strategist at CMC Markets.
Elsewhere, in a document keenly awaited by markets, the U.S. Treasury Department’s semi-annual currency report, released on Wednesday, did not name China or any other trading partner as a currency manipulator.
“The fact that they refrained from labeling China a currency manipulator is a positive development, especially from the point of view of emerging market currencies,” said Attrill.
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