dollar

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