By Peter Nurse
Investing.com – The U.S. dollar slipped lower in early European trade Thursday, but remained near its recent highs after the minutes of the Federal Reserve’s latest meeting pointed to more rate hikes ahead.
At 03:05 ET (08:05 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% lower at 104.433, still close to the six-week peak of 104.67 hit last week.
The minutes from the Fed’s February meeting stated that most of the officials supported the quarter-point increase because a slower pace “would better allow them to assess the economy’s progress” toward reducing inflation to their 2% target.
However, it’s clear some policymakers favored a larger 50 bps increase and the meeting occurred before the release of the blockbuster January jobs report which suggested a recession was not remotely close.
St. Louis Fed President James Bullard said the Fed still needs a “sharp” tightening of monetary policy to tame inflation, adding he expects short-term interest rates to peak between 5.25-5.50%, over half a percent above their current level.
Elsewhere, EUR/USD rose 0.1% to 1.0610, edging away from the six-week low of 1.0598 hit in the previous session ahead of the release of the final reading of the Eurozone’s consumer price index for January.
The annual figure is expected to climb to 8.6%, from 8.5% the previous month, suggesting inflation remains tricky to tame and thus the European Central Bank will remain in a tightening groove for some time.
GBP/USD rose 0.1% to 1.2057, AUD/USD rose 0.4% to 0.6831, while NZD/USD rose 0.4% to 0.6242, still feeling the benefit from the Reserve Bank of New Zealand decision earlier this week to lift its interest rates to its highest level since late 2008 and guide for more increases to come.
USD/JPY traded largely flat at 134.88, ahead of the eagerly awaited address by Bank of Japan Governor nominee Kazuo Ueda to parliament on Friday, which could address the fate of the central bank’s controversial bond yield control policy.