By Shinichi Saoshiro
TOKYO (Reuters) – The dollar edged up on Thursday after upbeat U.S. data and supportive minutes from the Federal Reserve’s latest policy meeting helped it shake off recent weakness.
The (), measuring it against a basket of six major currencies, extended the previous day’s bounce to stand 0.02 percent higher at 92.183 . It had declined to 91.751 on Tuesday, its lowest since Sept. 20.
The dollar bounced after Wednesday’s strong U.S. manufacturing and construction data.
It gained further support as the minutes from the Fed’s Dec. 12-13 meeting were more hawkish than anticipated, indicating the central bank is still poised to raise interest rates several times this year.
Fed policymakers acknowledged the U.S. labor market’s solid gains and the expansion in economic activity, even as they affirmed worries about persistently low inflation.
That suggested the central bank will continue to pursue a gradual approach in raising rates but could hasten the pace if inflation accelerates.
“The dollar did feel downward pressure at the turn of the year, but the selling was not based on very strong factors,” said Masafumi Yamamoto, chief currency strategist at Mizuho Securities in Tokyo.
Rebalancing of positions caused by investors closing their books toward the turn of each year can lead to dollar selling.
“As such, strong U.S. data and the Fed’s minutes, which suggested board members were not as pessimistic toward the potential economic impact of U.S. tax cuts as many in the market expected, helped the dollar get back on course,” Yamamoto said.
The euro was little changed at $1.2016
The U.S. currency was 0.15 percent higher at 112.655 yen
Increasing investor risk appetite in broader markets also supported the dollar, notably against perceived safe-havens such as the yen and Swiss franc. The latter was at 0.9778 franc per dollar
Buoyed by overnight gains on Wall Street, Tokyo’s Nikkei () began the first day of trading in 2018 by rallying 2.5 percent. prices were at 2-1/2-year highs, helping fuel inflation expectations.
Makoto Noji, senior strategist at SMBC Nikko Securities, expects dollar/yen to stay around 110 yen in the medium term.
“Yen demand stemming from Japan’s current account surplus will be checked by yen selling pressure stemming from ‘risk on’ generated by global economic growth,” he said. “Dollar/yen is likely to remain in range around 110 yen amid this tug-of-war.”
The pound was steady at $1.3515
The Australian dollar was a shade lower at $0.7832
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