The US Dollar Rises After the Announcement of the Fed Minutes

The dollar is gaining on Thursday morning in Asia and remains near a five-year high against the yen. The release of the minutes of the FOMC meeting continues to push the dollar higher.

  • The dollar index against the other six currencies in a basket rose 0.01% to 96.188.
  • The yen dropped 0.20% to 115.87 yen per dollar.
  • The Australian dollar fell 0.45% to 0.7187.
  • The New Zealand dollar fell 0.38% to 0.6766.
  • The yuan rose 0.29% to 6.3738 yuan per dollar. China data released earlier that day showed the Caixin Institute’s China Services PMI was 53.1 in December.
  • The pound fell 0.14% to 1.3535 pounds per dollar.
  • The baht was also put under pressure by the appreciation of the dollar. It depreciated today by 0.54% to 33.370 baht per US dollar.

The minutes of the Federal Reserve’s December meeting were released Wednesday. It says the “extremely tight” U.S. labor market could lead to faster-than-expected rate hikes to curb high inflation.

While futures contracts on the federal funds rate can be priced quickly, there is about an 80 percent chance that the Fed will raise rates by four percent at its March 2022 meeting.

In addition, the yield on the 5-year U.S. bond, which is particularly sensitive to interest rate expectations, rose to its highest level in almost two years.

Investors are still weighing the nonfarm payroll changes reported by ADP on Tuesday, which came in above expectations of 807,000 in December. The U.S. labor market report, which includes nonfarm payrolls, will be released on Friday.

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