Dollar struggles as Fed minutes dampen rate-hike hopes
The dollar was under pressure against the yen and euro in Asia Thursday after surprisingly bearish minutes from the US Federal Reserve’s last meeting dampened hopes for an imminent interest rate hike.
In Tokyo, the dollar bought 124.04 yen, up from 123.89 yen in New York, but well down from 124.32 yen in Asian trading on Wednesday before the minutes’ release.
The euro ticked up to $1.1124 and 137.98 yen, from $1.1121 and 137.78 yen in US trade, winning support from news that European finance ministers formally approved Greece’s 86 billion euro bailout.
The dollar took a hit in New York after the US central bank dampened expectations for a rate hike that some had thought could come as early as September.
While the Fed said the time for a hike was “approaching,” it singled out a slowdown in China’s economy as a red flag for US growth.
Those concerns have been heightened since the last Fed meeting in July, before China unexpectedly devalued its currency last week in a move seen as designed to boost slowing exports.
“While the Fed is looking less likely to move in September, everybody is really worried that China is slowing down faster than what official figures are telling you,” Evan Lucas, at IG Markets in Melbourne, told Bloomberg News.
Meanwhile, finance ministers in the 19-country eurozone gave the all-clear after the new bailout was approved by European parliaments, including the Bundestag of Germany, Greece’s effective paymaster.
The long-debated bailout accord goes far beyond economic management to include an extensive overhaul of Greece’s health and social welfare systems, plus its business practices and public administration.
The dollar was mixed against other Asia-Pacific currencies.
It strengthened to 46.34 Philippine pesos from 46.27 pesos on Wednesday, to 1,185.17 South Korean won from 1,183.54 won, and to 13,845 Indonesian rupiah from 13,838 rupiah.
The greenback slipped to Sg$1.4026 from Sg$1.4035, to 65.19 Indian rupees from 65.24 rupees, and to Tw$32.47 from Tw$32.49.
The Thai baht was stronger at 35.54 against the dollar from 35.62 a day earlier. The currency slumped on Tuesday to a fresh six-year low of 35.64 in the wake of Bangkok’s deadly bombing, which threatened to damage Thailand’s crucial tourism industry.
The Australian dollar edged up to 73.45 US cents from 73.33 US cents, while the Chinese yuan fetched 19.36 yen from 19.41 yen.
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