Dollar inches lower as market braces for Fed policy meeting minutes

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Dollar softens as market hopes Fed meeting minutes will hold monetary policy weather vaneDollar softens as market hopes Fed meeting minutes will hold monetary policy weather vane

Investing.com – The dollar traded largely lower against most major currencies on Tuesday as investors avoided the greenback ahead of the release of the Federal Reserve’s June policy meeting minutes on Wednesday.

Many were hoping the document would contain language indicating when interest rates may begin rising in the U.S. and avoided the greenback ahead of time.

In U.S. trading on Tuesday, EUR/USD was up 0.06% at 1.3613.

The Federal Reserve will release the minutes from its June policy meeting on Wednesday, and investors avoided the greenback ahead of time, as uncertainty persists as to what the U.S. central bank will do with interest rates.

While the labor market has shown some signs of improvement, markets remain unclear as to how much time will pass from when the Fed will wrap up stimulus programs and when it will begin hiking benchmark interest rates.

U.S. Treasury yields edged lower on Monday due to the ambiguity, which gave the euro room to strengthen against the greenback.

The yield on the U.S. 10-Year Treasury note fell to a one-week low of 2.57% on Tuesday due to concerns that the Fed will remain dovish on interest rates despite improvements taking place in the labor market.

Last week, the Department of Labor reported that non-farm payrolls rose by 288,000 in June, easily surpassing expectations for an increase of 212,000.

Meanwhile in Europe Germany reported that both imports and exports fell in May, which watered down the euro’s gains.

The dollar was down against the yen, with USD/JPY down 0.32% at 101.54, and down against the Swiss franc, with USD/CHF down 0.07% at 0.8930.

The greenback was down slightly against the pound, with GBP/USD up 0.03% at 1.7132.

Earlier Tuesday, the Office for National Statistics said U.K. manufacturing production fell 1.3% in May, the largest decline since January of 2013, confounding expectations for a gain of 0.4%.

Overall industrial production was down 0.7%, the biggest fall since August of 2013, bringing the annual rate to 2.3%.

The data spooked investors somewhat, stoking fears that U.K. economic recovery may not be a solid as hoped.

The dollar was down against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.09% at 1.0674, AUD/USD up 0.34% at 0.9404 and NZD/USD up 0.41% at 0.8794.

The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.07% at 80.22.



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