The U.S dollar on Thursday, February 23, traded close to one-month highs on Thursday, following the lack of a clearer signal from the U.S. Federal Reserve that it might raise interest rates in March.
The dollar edged up less than 0.1 percent against a basket of major currencies but held below highs hit on Wednesday, having fallen immediately after the minutes were released.
It traded in tight ranges against the yen and the euro, moving back above $1.05 against the single currency after a pledge of support for centrist candidate Emmanuel Macron from one rival soothed investor nerves about how France’s presidential election might pan out.
The dollar index, which measures its broader strength against a basket of other currencies, was marginally higher on the day at 101.32 .DXY. That compared to a one-month high of 101.76 hit last week.
The political nerves that have affected trade in the single currency were still in evidence, driving 2-month implied volatility of the currency to the highest in a month as contracts took in the first round of the election in April.
But the 3-month equivalent was down slightly from post-Brexit vote highs hit on Wednesday, bolstering spot prices for the euro.
By 0900 GMT, the euro was steady on the day at $1.0556 EUR=, up half a cent on lows hit in the European morning on Wednesday.
The big set piece overnight was the Fed’s minutes, which while not as hawkish as some in the market had hoped, just about kept a March interest rate hike in play.
The Fed rarely delivers interest rate moves that are not largely priced in by money markets and Fed funds futures show the chances of a rise next month are still only around 20-25 percent. Any move in those expectations can be expected to push the dollar higher after a listless few weeks.
New U.S. finance chief Steven Mnuchin told the Wall Street Journal that the strong dollar was “a good thing” in the long run, in contrast to a number of comments by officials in President Donald Trump’s administration that have weighed on the currency in the past month.
The dollar was down 0.2 percent at 113.10 yen in morning trade in Europe. JPY=The Aussie dollar, another mover overnight after some poor capital expenditure numbers, was also down 0.2 percent at $0.7690 having earlier fallen almost half a percent. AUD=
