Fed Minutes Fail to Lift Dollar
The US Dollar Index (DXY) hovered around the 101.00 level on Wednesday (July 8th). Investors were still digesting the minutes of the Federal Open Market Committee (FOMC) meeting held on June 16-17, the first under the leadership of Fed Chairman Kevin Warsh.
The minutes showed that the Fed remained cautious. Officials agreed to maintain interest rates but still viewed inflation risks as high. Several officials also highlighted the potential for price pressures from large AI-related investments, higher tariffs, and renewed tensions in the Middle East.
The minutes tended to support the narrative of higher interest rates for longer. Several officials assessed that additional interest rate hikes could be necessary if inflation moves in an unfavorable direction. However, the US dollar failed to strengthen sharply as markets also considered weaker growth expectations and slowing US employment data.
In major currency markets, EUR/USD recovered to around the 1.1430 area despite lingering geopolitical risks. GBP/USD also rose above 1.3400 and touched a multi-week high due to the broad dollar's weakness. Meanwhile, USD/JPY remained high around 162.50 as the Japanese yen remained weak against the dollar.
AUD/USD also strengthened to around 0.6940, but has yet to build strong momentum. The Australian dollar remains vulnerable to geopolitical uncertainty and the Fed's narrative that it could keep interest rates high for longer. Furthermore, the market is also awaiting Chinese inflation and economic activity data, as Australia's outlook is closely linked to Chinese commodity demand. (arl)
Source: Newsmaker.id
