Dollar firms on rate hike views after Fed minutes, yen treads water
By Rae Wee
SINGAPORE (Reuters) — The dollar was broadly higher on Thursday, after the release of minutes from the Federal Reserve's latest policy meeting cemented market expectations for a rate hike this month.
In Asia, the yen hovered near the key 145 per dollar level that spurred intervention by Japanese authorities last September, while a faltering economic recovery in China continued to put downward pressure on the yuan.
Minutes of the Fed's June meeting released on Wednesday showed that the vast majority of policymakers expect further tightening in U.S. monetary policy, even as they agreed to hold interest rates steady last month.
That sent the dollar slightly higher alongside Treasury yields, as bets firmed that the Fed will resume its rate-hike campaign this month and that rates would stay higher for longer in order to tame inflation. [US/]
Against the dollar, the euro touched a near one-week low of $1.0843 in early Asia trade, while sterling dipped 0.08% to $1.26925.
The dollar index rose 0.04% to 103.38.
«The FOMC minutes seemed hawkish with some committee members favouring a rate hike, though none voted for one at the end,» said Alvin Tan, head of Asia FX strategy at RBC Capital Markets.
«It heightened the impression that the June pause was an interim one.»
Markets are now pricing in an 89% chance that the Fed will raise rates by 25 basis points at its policy meeting later this month, according to the CME FedWatch tool.
Elsewhere, the yen rose more than 0.2% to 144.30 per dollar, as worries over potential intervention from Japanese authorities to shore up the yen capped its decline.
Japanese firms offered the biggest pay hikes in three decades at this year's negotiations with workers, Japan's largest trade
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