The U.S. dollar is stable against the euro in trading on Thursday, getting cheaper against the yen, despite the hawkish tone of the Federal Reserve’s (Fed) December meeting minutes published the day before.
The ICE-calculated index showing the dollar’s performance against six currencies (euro, Swiss franc, yen, Canadian dollar, pound sterling and Swedish krona) is stable in trading, while the broader WSJ Dollar Index is adding 0.01%.
As of 8:00 a.m. Ksk on Thursday, the euro/dollar pair is trading at $1.0610, up from $1.0606 at the close of the previous session.
The value of the U.S. currency in a pair with the yen dropped to 132.47 yen, compared to 132.63 yen in previous trading.
The pound to dollar exchange rate fell to $1.2040 against $1.2054 the day before.
Minutes of the December meeting of the Federal Reserve showed that none of the Fed’s leaders believes it is reasonable to reduce the benchmark interest rate in the beginning of the year, as the financial markets expect.
Meeting participants generally believed that “maintaining restrictive monetary policy for an extended period until inflation clearly moves toward 2 percent would be justified,” the minutes said.
At that, the U.S. Central Bank confirmed its desire to achieve slowdown of inflation without excessive weakening of economic activity, Bloomberg agency notes.
Heads of Fed named two main risks as preservation of the raised inflation during longer, than it is expected, interval, and also the fact that the cumulative effect from raising rates can appear with some delay and lead to excessive toughening of financial conditions.
In December the Fed raised the rate by 50 basis points (bps) – to 4,25-4,5% per annum, while at the previous four meetings the rate was increased by 75 bps. At the same time, Fed Chairman Jerome Powell said the U.S. central bank will raise the rate until it meets its inflation targets.
Investors are waiting for the U.S. labor market data for December, which will be released on Friday at 15:30 ksec. Experts polled by Trading Economics on average expect the number of jobs in the U.S. to rise by 200,000 last month and unemployment to remain at 3.7%.
