Dollar holds losses as Fed minutes signal slower rate hikes

Thursday,   24-Nov-2022   03:34 PM (IST)

The U.S. dollar held onto losses on Thursday after the minutes from the Federal Reserve's November meeting supported the view that the central bank would downshift and raise rates in smaller steps from its December meeting. The eagerly awaited readout of the Nov. 1-2 meeting showed officials were largely satisfied they could now move in smaller steps, with a 50 basis point rate rise likely next month after four consecutive 75 basis point increases. The dollar index , which measures the greenback against six major peers, was little changed at 105.93, after sliding 1.1% on Wednesday. The Fed has taken interest rates to levels not seen since 2008 but slightly cooler-than-expected U.S. consumer price data has stoked expectations of a more moderate pace of hikes. Those hopes have seen the dollar index slide 5.1% in November, putting it on track for its worst monthly performance in 12 years. In Europe, the focus was set to turn to the accounts of the European Central Bank's November meeting at 1230 GMT. The euro was up 0.2% at $1.0415, while sterling was last trading at $1.2086, up 0.3% on the day. The pound rallied 1.4% on Wednesday after preliminary British economic activity data beat expectations, although it still showed that a contraction was under way. The euro was up 0.3% against the Swedish krone after Sweden's Riksbank raised rates by 75 basis points, in line with expectations in a Reuters poll. In China, rising coronavirus cases have led cities nationwide to impose more curbs, increasing investor worries about the economy and putting a lid on risk appetite. China reported a record number of infections on Thursday. The yuan firmed after Chinese state media quoted the cabinet as saying that Beijing will use timely cuts in banks' reserve requirement ratio (RRR), alongside other monetary policy tools, to keep liquidity reasonably ample. The Japanese yen was one of the strongest gainers among major currencies against the dollar, climbing 0.6% to 138.77. The Australian dollar rose 0.2% to $0.6747, while the kiwi was 0.1% higher at $0.6249. U.S. markets will be closed on Thursday for Thanksgiving and liquidity will likely be thinner than usual.