The U.S. Dollar edged higher, hitting a 2-month peak against its Japanese rival following the release of Fed minutes which clearly indicated that not every FOMC member supports the continuation of its ultra loose monetary policy. As a result, with investors’ hopes revived that the Fed might begin to curtail the Quantitative Easing program at last, the greenback was pushed broadly higher. One analyst at BNP Paribas says that while it was well known that the Fed wanted to wait for more supportive data before making a policy change, the fact that the makeup of the FOMC was decidedly more hawkish suggested that an improvement in data could result in a swifter reaction.
As reported at 12:33 p.m. (JST) in Tokyo, the USD/JPY pair was trading at a session high of 100.53 Yen, less then ten pips from September’s high of 100.62 Yen, and was last trading at 100.37 Yen. The U.S. Dollar Index struck a 1-week peak at 81.166 .DXY; the Index gained 0.5% during yesterday’s trading day which was the largest single day’s gain in nearly two weeks. The EUR/USD edged 0.1% lower to trade at $1.3425, adding to Wednesday’s 0.7% loss.
ECB Said to be Considering Negative Rates
Also helping to prop up the U.S. Dollar against the common currency Euro, there was more talk of additional stimulus from the European Central Bank, which effectively erased all of the Euro’s recent gains. A recent media report by Bloomberg indicated that the central bank might be considering a reduction of its deposit rate to below zero, thus encouraging banks to park overnight deposits at peers rather than the central bank’s vault.