INV: Dollar at 8-month highs vs. pound, yen slips before Fed minutes
Investing.com - The dollar was trading close to eight month highs against the pound on Wednesday after the release of dovish Bank of England minutes, and pushed higher against the yen ahead of minutes from the Federal Reserve’s most recent policy meeting later in the session.
During U.S. morning trade, the dollar rose to its highest level against the pound since June, with GBP/USD dropping 0.79% to 1.5305.
The minutes of the BoE’s February meeting showed that policymakers were split six to three on whether to increase the bank's quantitative easing program to GBP400 billion from GBP375 billion, with BoE Governor Mervyn King voting in favor of an increase.
At the previous meeting the voting had been eight to one in favor of keeping the stimulus program unchanged.
Separately, official data showed that the number of people claiming unemployment benefits in the U.K. fell by a seasonally adjusted 12,500 in January, compared to expectations for a decline of 5,000.
The U.K. unemployment ticked up to 7.8% from 7.7% in December. Analysts had expected the jobless rate to remain unchanged.
The dollar pushed higher against the yen, with USD/JPY rising 0.18% to 93.73.
Investors were awaiting an announcement on nominees to replace outgoing Bank of Japan Governor Masaaki Shirakawa, whose policies Prime Minister Shinzo Abe has criticized for not going far enough to combat deflation.
The yen showed little reaction earlier after official data showed that Japan’s trade deficit rose to a record JPY1.629 trillion in January. However, the data showed that exports increased 6.4% year-on-year, the first increase in eight months.
In the U.S. official data showed that the number of building permits issued in January rose 1.8% to a seasonally adjusted 0.925 million, above expectations for a 1.2% increase to 0.915 million units.
U.S. housing starts fell by 8.5% to a seasonally adjusted 0.890 million last month, compared to expectations for a decline of 3.6% to 0.925 million.
A separate report showed that producer price inflation in the U.S. rose 0.2% in January, rising for the first time in four months.
The dollar edged higher against the euro, with EUR/USD dipping 0.09% to 1.3375.
The euro remained under pressure ahead of the outcome of the upcoming general elections in Italy, amid wariness that a hung parliament could hamper efforts to implement further economic reforms.
Elsewhere, the greenback was fractionally higher against the Swiss franc, with USD/CHF edging up 0.07% to 0.9232.
The greenback strengthened against its Canadian, Australian and New Zealand counterparts, with USD/CAD rising 0.38% to 1.0153, AUD/USD down 0.65% to 1.0288 and NZD/USD tumbling 1.18% to 0.8369.
The New Zealand dollar fell sharply after Reserve Bank of New Zealand Governor Graeme Wheeler said Wednesday that the currency is overvalued compared to economic fundamentals and warned that the bank is ready to intervene.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.20% to 80.73.
Investors were looking ahead to the release of minutes from the Federal Reserve’s January meeting later in the trading day, amid speculation over how long the U.S. central bank is likely to pursue its quantitative easing program.
