Dollar fell in European trade on Thursday against a basket of major rivals, extending losses for the seventh straight session and hitting a three-week trough following the Fed’s minutes.
The Fed’s minutes for the January meeting only confirmed the speculation that the June meeting will be the time of the first rate cut.
Now investors await important US data later today on unemployment claims and the manufacturing and services sector to get better clues about the state of the economy.
The Index
The dollar index fell 0.5% to 103.43, the lowest since February 2, with a session-high at 103.99.
The index lost 0.1% on Wednesday, the sixth loss in a row, and the longest streak of daily losses this year.
The Fed
The Federal Reserve’s policy meeting showed that policymakers dismissed the odds of early rate cuts unless inflation proved to be moving sustainably towards 2%.
The minutes showed the Fed is seeking to achieve full employment targets alongside 2% inflation in the long-term, with ongoing uncertainty about economic outlook.
As for monetary policy in the future, the minutes asserted the cautious and data-based approach by Fed officials as the priority is given to economic stability and inflation control.
US Rates
Following the minutes, the odds of a 0.25% US interest rate cut in March tumbled to just 4.5%, while the odds for a May cut fell to 37%, as the odds for a June cut fell to 71%.
Traders now expect 75 basis points of total Fed rate cuts this year, down from 150 basis points in previous forecasts.
Important Data
Now investors await a batch of important US data covering the labor, manufacturing, and services sectors to get better clues on the likely path ahead for Fed policies.
US unemployment claims are expected up slightly to 217 thousand in the week ending February 17 from 212 thousand.
The US manufacturing PMI is expected at 50.5 last month, down from 50.7.
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