BLBG:Dollar Extends Rally Against Most Majors As Fed Signals QE Exit
The US dollar extended its overnight gains against majority of its key counterparts on Thursday in Asia as the minutes of Federal Reserve's latest policy meeting hinted that the Fed's quantitative easing program could end before attaining the 6.5 percent unemployment target.
"Most participants judged that there had been some reduction in downside risks facing the economy: Strains in global financial markets had eased somewhat, and U.S. fiscal policymakers had come to a partial resolution of the so-called fiscal cliff," the minutes read.
Members noted that employment continued to increase at a moderate pace, and the unemployment rate, though still high, was lower at the end of the fourth quarter than in the preceding quarter.
Members had varying opinions on the size and timing of asset buying, but the most recent data on inflation is unlikely to make the Fed reconsider its ultra-easy monetary policy.
Analysts say some Fed members will push to end the asset purchases earlier than expected, but most will not want to risk the recovery by tightening too soon.
Federal Reserve policy makers say the U.S. economy continues to show modest improvement despite weather-related issues late in 2012, according to the minutes of the Federal Open Market Committee's January meeting.
Following a two-day meeting ending January 30, the Fed vowed it will continue to support the U.S. economy with $85 billion a month in asset purchases until the jobs market shows more substantial improvement.
The U.S. dollar touched 1.5135 against the pound around 12:20 am ET Thursday, its highest level since July 2010. The next barrier for the greenback is seen around the 1.4950 level versus the sterling in the near-term.
The US dollar rose back above the key 0.93 level against its Switzerland counterpart for the first time since January 25. The greenback-franc pair is staying in the trend-line resistance of a descending channel, with 0.9330 seen as the next likely target in the near-term.
The greenback rose to 1.3243 against the euro by 12:40 am ET, its highest level since January 10. The next likely resistance for the dollar is seen at 1.3150, its 38.2 percent retracement target in its May 2011-July 2012 rally.
On the flip-side, the dollar traded lower against the yen as the latter strengthened across the board on Thursday in Asia. The greenback reached as low as 93.37 against the yen, down from a session's high of 93.88.
Traders wait for the Swiss trade data, the UK public sector net borrowing-both for January and the purchasing managers' indexes from the major eurozone economies for February in the European session.
The U.S. weekly jobless claims for the week ended February 16, the inflation data, leading indicators, existing home sales-all for January, Philadelphia Fed's manufacturing index for February and speeches by a couple of Fed officials will provide adequate cues in the North American session.
