US dollar falls as Fed minutes stress patience over rate hikes

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New York, Jan 10 (IANS) The US dollar dropped on Wednesday, hitting a new low since October last year, as the latest minutes of US Federal Reserve’s policy meeting hinted at less monetary tightening and investors pinned hope on the just-concluded US-China trade talks.

In late New York trading, the euro rose to $1.1544 from $1.1442 in the previous session, and the British pound rose to $1.2794 from $1.2719 in the previous session, Xinhua news agency reported.

The Australian dollar was up to $0.7180 from $0.7139.

The US dollar bought 108.26 Japanese yen, lower than 108.63 Japanese yen of the previous session. The US dollar was down to 0.9750 Swiss franc from 0.9812 Swiss franc, and it fell to 1.3221 Canadian dollars from 1.3282 Canadian dollars.

“The Committee could afford to be patient about further policy firming,” said the Federal Open Market Committee (FOMC) in the minutes of the December 18-19, 2018, released on Wednesday.

The statement was made as the FOMC, a Fed branch that determines interest rates and the country’s money supply growth, believed that the recent volatility in financial markets and the increased concerns about global growth have made the “appropriate extent and timing of future policy firming less clear than earlier.”

In consideration of the status quo of the financial markets, the committee stressed that “a relatively limited amount of additional tightening likely would be appropriate”.

Such moves indicate that the US central bank would likely loosen its constraints on the money flowing in the market, which would consequently reduce the greenback’s comparative edge.

Investor sentiment also grew positive on hopes of good results from the just-concluded trade talks between US trade representatives and Chinese officials in Beijing.

A stable global trade system would offer a relief for risky yet profitable assets investors and allow them to reduce their holding of safehaven currencies like the greenback.

The dollar index, which measures the greenback against six major peers, fell 0.72 per cent at 95.2150 in late trading.

–IANS

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