* Dollar jumped after Fed minutes less dovish than some
expected
* Euro flat
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
By Julien Ponthus
LONDON, Aug 20 (Reuters) - The dollar rose on Thursday,
pulling away from a two-year trough after less dovish than
expected minutes from last month's U.S. Federal Reserve meeting
prompted bears to buy into the heavily shorted currency in its
biggest one-day surge since June.
The dollar index, which tracks the greenback's value against
a basket of currencies =USD , had climbed 1% above the two-year
low at 92.12 hit on Tuesday, and was consolidating gains at
92.90 in early London trading.
The jump following the release of the Fed minutes on
Wednesday was the dollar's biggest single-day rise since early
June, according to Refinitiv data.
"Yesterday did see a large reversal of some of the recent
weakness with the dollar index bouncing back," Deutsche Bank
strategists commented in their morning note.
Speculation has been rife that the Fed will adopt an average
inflation target, and seek to push inflation above 2% to make up
for years it has run below, or look to cap government bond
yields as part of a broader policy review. The minutes were vague on the matters and merely said "a
number" of Fed members thought it would be helpful to make a
revised statement on its policy strategy at some point, without
providing details or timing. But for many analysts, the main takeaways were obvious.
"Overall, the picture should be clear: the economy is in
serious difficulty due to the virus; the Fed is not going to
raise rates for a long, long time; and at some point it will
make that clear with a new set of targets, goals, and strategy
(...)", wrote Michael Every, a strategist at Rabobank.
The euro - the biggest beneficiary of the dollar weakness -
fell back below $1.19 and stood at $1.1856 EUR=EBS , up 0.16%.
Short bets against the world's dominant reserve currency had
risen to their largest since 2011 last week and long bets on the
euro were at a record high. 0#NETUSDFX=
The pound GBP=D3 fell a quarter of a percent to $1.3078
and the dollar jumped about 0.7% on the yen JPY= to 106.00.
After hitting an 18-month high of $0.7275 before the
meeting, the Australian dollar AUD=D3 fell back below 72 cents
to $0.7180. The New Zealand dollar NZD=D3 dropped almost 1.3%
from its intraday high to sit at $0.6561.
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U.S. Dollar Index & CFTC speculative currency positions https://tmsnrt.rs/2Q64Zj7
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