The dollar was lower in early European forex trading Thursday, as riskier currencies were more in favor. This came after the minutes from the Federal Reserve’s latest meeting reinforced its easy policy stance.
The Dollar Index was down 0.1% at 90.903 at 3:55 AM ET (0755 GMT).
EUR/USD added 0.1% to 1.2047 and GBP/USD gained 0.1% to 1.3864. On the other hand, USD/JPY fell 0.1% at 105.81, while the AUD/USD rose 0.1% to 0.7758.
The U.S central bank released the minutes from its January policy meeting on Wednesday, reinforcing its plans to let the economy overheat. That is while maintaining an ultra-accommodative monetary policy.
The minutes of the Federal Reserve’s meeting showed that the central bank is upbeat on America’s growth prospects in 2021, more than beforehand. This was a statement from Yohay Elam, an analyst at FX Street, in a research note.
However, the Fed seems unmoved from all the talk about higher inflation, he said. It is unlikely to raise rates nor taper its bond-buying scheme. Under these circumstances, the greenback will likely remain under pressure, Elam added.
Biden’s Proposed $1.9 Trillion Stimulus Package
Advancement is being made on President Joe Biden’s proposed $1.9 trillion stimulus package. The president met with labor leaders on Wednesday to canvass support.
This package prompts much discussion over the likely path of inflation levels going forward. It’s because it is expected to be largely funded by borrowing.
Reports on Wednesday said retail sales grew 5.3% month-on-month in January. That’s against the forecast 1.1% growth and December’s 1% fall.
Elam said that some are concerned that this good news is bad news as it may lower pressure for stimulus. However, unemployment remains high, with some ten million Americans still out of work, he said. Weekly jobless claims are set to provide a reminder that the economy is still struggling, Elam added.
At 8:30 AM ET (1330 GMT), weekly initial jobless claims are due for release.
In other forex news, USD/TRY pushed 0.1% higher to 6.9684 ahead of the latest meeting of Turkey’s central bank. Interest rates are expected to remain unchanged at 17% for a second month.
The lira rose against the dollar since President Recep Tayyip Erdogan overhauled his economic policy team in November. This installed a new central bank governor who promptly instigated a series of rate hikes to help the previously battered currency.