Dollar comes down from Fed minutes high

Wall Street opens sharply down after two sessions of losses
May 20, 2021
May 20, 2021

Dollar comes down from Fed minutes high

NEW YORK (Reuters) – The dollar lost ground on Thursday, hovering just above a multi-month low following Wednesday’s bounce prompted by the release of U.S. Federal Reserve meeting minutes.

In those minutes, from the Fed’s most recent monetary policy meeting, several policymakers said a discussion about reducing the pace of asset purchases would be appropriate “at some point” if the U.S. economic recovery continues to gain momentum.

That gave a boost to the greenback, which had been on the decline in recent weeks on repeated Fed reassurances that it is too soon to tighten its accommodative policy and that current price spikes will not morph into longer-term inflation.

But weakening Treasury yields helped pull the dollar back down.

“The only reason we saw yesterday’s pop is the Fed is open to the possibility of starting the tapering debate sooner than expected,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York. “(But) the dollar remains on a downward trend in the immediate future.”

The dollar index was last down 0.37% at 89.884.

That weakness helped boost the Australian dollar which also got a lift from strong April employment data. It was up 0.61% at $0.7773.

The euro gained 0.3% to $1.2211 and the dollar fell 0.42% to 108.765 Japanese yen.

The cryptocurrency roller coaster was on an upswing in the wake of a steep sell-off following China’s regulatory move against the digital assets.

That sell-off has since reversed course with the help of bargain hunters.

Bitcoin was most recently up 13.4% at $41,812 after plummeting to 54% below its record high hit just over a month ago after some of its prominent backers reiterated their support for the digital currency.

Smaller rival Ether gained 19.5% to $2,911. On Wednesday, it fell 22.8%, its biggest daily fall since March 2020.

“What we saw yesterday confirms that (cryptos are) a speculative market,” Cardillo added.

Reporting by Stephen Culp; Additional reporting by Saikat Chatterjee in London; Editing by Jonathan Oatis