On Thursday, May 20, USD slipped as the U.S. Federal Reserve’s April meeting minutes disclosed that officials recommended a downtrend of bond purchases due to a sign of soaring inflation.
Overnight, the gain in the U.S. dollar is nearly impossible in early London trading as the greenback declined against most of its currency peers. The USD Index trails the greenback in opposition to a basket of other currencies, shrunk by 0.08% to 90.123, but it stayed well over a late February low of 89.686 hits on Wednesday.
Besides, the USD/JPY pair sank 0.07% to 109.14 as April’s trade figures released earlier in the day surpassed expectations.
Exports smashed 38.0% year-on-year while imports jumped 12.8% year-on-year, and the trade balance spiked JPY225.3 billion.
The substantial beneficiary of the fragile USD trends was the Aussie dollar which also received a tweak from strong April jobs data. Thus, the AUD/USD pair advanced 0.17% to 0.7740, where the current unemployment rate shed 5.5% while employment change eased by 30,600.
Across the Sea of Tasman, NZD/USD improved by 0.13% to 0.7176.
Meanwhile, USD/CNY also rose 0.07% to 6.4385, with the People’s Bank of China emancipating the loan prime rate earlier this day.
The euro ameliorated 0.2% higher at $1.22 after having dragged 0.4% in the foregoing session and off a three-month high of $1.2245.
Lastly, USD/ZAR lapsed 0.2% at 14.0812 onwards at the latest meeting of South Africa’s central bank.
On Thursday, the bank seemed to retain its interest rates unchanged, but anticipations are soaring that it may be forced to tighten its policies this year following accelerated inflation more than expected.
Federal Reserve Hints at Taper Talk
On Wednesday, the U.S. Federal Reserve released its meeting minutes that were held in April, which hinted at tapering asset purchases.
Several policymakers proposed that the central bank will start scaling bank asset purchases sooner or later if the United States continues toward its economic recovery.
Some investors were shocked as Fed Chairman Jerome Powell and other Fed officials restated that the Fed will be sticking to its current dovish policy as any spiking inflation may only be temporary.
An analyst said that the minutes from the previous Fed meeting contain statements that may seem to strive for a discussion on tapering sooner than anticipated. He added that if the next job statistics that are due on June 9 are robust, markets are going to support the Fed’s plan of tapering at the next June meeting.
In addition, it must be noted that the Fed’s minutes precede the latest consumer price index and payroll or earnings. That is why the fears of some seem to be becoming a little more serious since the April meeting.