Black Friday is Now! Don’t miss out on up to 60% OFF InvestingProCLAIM SALE

Forex - Dollar Nears 3-Year Highs as Fed Sees Rates on Hold 'for a Time'

Published 02/20/2020, 03:59 AM
Updated 02/20/2020, 04:25 AM
© Reuters.
EUR/USD
-
GBP/USD
-
USD/JPY
-
USD/CAD
-
DX
-

By Yasin Ebrahim

Investing.com – The U.S. dollar remained near three-year highs on Wednesday, underpinned by better-than-expected economic data. The greenback had a muted reaction to the minutes of the Federal Reserve January meeting, which suggesting interest rates will likely be on hold for a time.

The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, rose by 0.23% to 99.52, touching its highest level since May 2017.

"With regard to monetary policy beyond this meeting, participants viewed the current stance of policy as likely to remain appropriate for a time ... to support sustained expansion of economic activity, strong labor market conditions, and inflation returning to the Committee's symmetric 2 percent objective," the minutes showed.

The minutes had a muted impact on the dollar, following U.S. housing and wholesale inflation data that topped economists' forecasts.

The Commerce Department said Tuesday U.S. homebuilding fell 3.6% to a seasonally adjusted annual rate of about 1.6 million units in January. That was less than economists had expected.

The report also highlighted a sharp 9.2% rise in building permits to a rate of 1.5 million units. That was the highest in nearly 13 years, suggesting the housing market remains on solid footing, underpinned by lower mortgage rates.

The Labor Department said its producer price index for final demand increased 0.5% last month, above economists' forecasts. In the 12 months through January, the PPI rose 2.1%.

The positive economic data helped the dollar rack up gains against the yen, which fell to eight-month lows on easing safe-haven demand amid signs the spread of the coronavirus virus is slowing.

USD/JPY surged 1.50% to Y111.51.

The pound, meanwhile, continued to drift lower, shrugging off better-than-expected U.K. inflation data.

GBP/USD fell 0.60% to $1.2919, while the EUR/USD was flat at $1.0795

USD/CAD slipped 0.24% to C$1.3226, with the loonie catching a bid on data showing consumer prices rose faster than expected last month.

But the rise in loonie may be short-lived as RBC said the current inflation readings were unlikely to prove "a barrier to the Bank of Canada cutting its benchmark rate to support growth and get the economy back to its potential."

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.