By NICHOLAS HASTINGS The minutes of the last Federal Reserve meeting may not be the game changer some think, but they should provide another good reason to keep on buying the dollar. Economic data from around the world suggest that although a global recovery is still taking place, growth remains slower than expected in some parts and is still largely absent in others. This is key to the dollar's performance as the slow pace of recovery elsewhere will ensure that investing in the U.S., and thus the dollar, remain more attractive. Also, pressure on other countries to devalue or degrade the value of their currencies will only intensify as they try to accelerate their economic recoveries. Last weekend's G-20 communique will have certainly seen to that. The meeting of the group's finance ministers in Moscow had been expected to take a more critical line of countries that have been pursuing polices that have weakened their currencies, such as Japan. In the end, however, the communique acknowledged the need for domestic policies pursuing growth and only appeared to veto direct market intervention to weaken a currency. This means that the way is probably now open for more countries to ease policy, even if that helps to undermine the value of their currencies against the dollar. So, what about the Fed's minutes? Before the minutes were released, financial markets worked on the assumption that the central bank would leave its third dose of quantitative easing open ended. Sure, there had been previous signs that some Fed members were not too keen on providing liquidity for many months to come. But, the new minutes showed that these concerns may have increased and that more members of the Fed are worried about the ultimate cost of keeping policy so easy for so long. In some quarters the minutes are being interpreted as a clear signal that the Fed is now more hawkish than it has been since the new policy was put in place in December. In other quarters, though, the minutes are simply being seen as evidence that the Fed is more open to discussion on the whole issue, and that this should not be taken as an excuse to drive U.S. yields higher at this stage. This appears to have been the line taken by U.S. Treasurys, where prices initially rose but then fell right back again in response to the minutes. The dollar, by contrast, rallied strongly, with the Dollar Index driving up through its 200-day moving average. At least some of that rally may have been driven, however, by factors other than a perceived shift in the Fed's position. A sharp decline in the price of gold and crude oil, driven by talk of a large fund liquidation, will have pushed nervous investors straight into the safe haven provided by the U.S. currency. So far there is little sign of the dollar falling back. And it is probably unlikely to do so just now as even if Fed Chairman Ben Bernanke fails to confirm a new hawkish stance in policy, the U.S. currency should still find support from the rising popularity of monetary easing elsewhere. (This is an opinion column by Nicholas Hastings, who is a Senior Correspondent in London for Dow Jones Newswires and has written about foreign exchange for more than 20 years. He previously covered a variety of markets, including equities, fixed income, commodities and energy. He can be contacted on +44-20-7842-9493, by email at nick.hastings@dowjones.com or on Twitter @NickHastingsDJ)

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