FOMC Minutes Undermine Dollar

The FOMC minutes released earlier today surprised the markets by mentioning that there may be a need for further US economic stimulus. They also contained comments stating that the winding down of the central’s mortgage purchases could harm the housing sector as well as pointing out that continual high employment may require an extension of the asset purchases.

The net effect was an increase of pressure on the dollar as any Fed rate hike appears now to be on the back-burner. Consequently, the EURUSD pushed higher to 1.4430 although it now has retreated to 1.4405.

The Yen was struggling early today because of the uncertainty generated by the resignation of the Japanese Finance Minister. The USDYEN had risen to highs of 92.70 before the FOMC minutes provided ammunition for the pair to recover to its present 92.35.