Fed Divided, Dollar Held Back
The US dollar moved flat on Wednesday (July 8th) after strengthening earlier in the session. The US Dollar Index fell slightly by 0.1% at 2:22 PM ET, after the market digested the minutes of the Federal Reserve's June meeting.
The FOMC minutes showed that some Fed officials saw reason to raise interest rates. However, all members ultimately agreed to maintain the benchmark interest rate in the 3.50%–3.75% range in the first meeting under Fed Chairman Kevin Warsh.
In the minutes, Fed officials assessed that the risk of rising inflation remained high. Meanwhile, the risk of a weakening labor market was considered to have eased slightly. This means the Fed cannot be overly dovish as price pressures remain a primary concern.
Meanwhile, the market is also still clouded by tensions between the United States and Iran. President Donald Trump declared that the interim deal with Iran was "over" after Tehran reportedly attacked US military facilities in Kuwait and Bahrain. These tensions caused Brent prices to surge 6.6% due to market concerns about energy supply disruptions.
Rising oil prices also pushed up US bond yields. The 2-year Treasury yield rose to 4.24%, while the 10-year yield hit a one-month high of 4.60%. Rising yields typically support the dollar, but the greenback's gains were capped after the market saw the Fed remain divided on its next interest rate path.
In other currency markets, the Australian dollar strengthened slightly, while the Japanese yen remained depressed at around 162.20 per US dollar. This level is still near the area that previously sparked concerns about intervention by Japanese authorities. Overall, the dollar remains supported by geopolitical risks and high yields, but has yet to receive a strong boost as the market awaits the next inflation data. (arl)
Source: Newsmaker.id
