Tom Westbrook

SINGAPORE (Reuters – On Thursday the dollar was at a high of nearly two years against a basket currencies, following minutes that showed that Federal Reserve officials were preparing aggressive action to curb inflation.

The is a measure of the greenback relative to six majors. On May 20, 2020, it reached 99.778 overnight and was close to 99.575 during early Asia trade.

As oil prices dropped, commodity currencies fell from their recent highs and the euro reached a one month low of $1.0874. In morning trading, it recovered to $1.0911

Minutes of the Federal Reserve’s March meeting show that “many” participants are ready to increase interest rates by 50 basis points at future meetings.

A general agreement was reached that $95 Billion per month should be removed from the asset portfolios of those who had suffered during the pandemic. Although this was closer to market expectations, it was still in keeping with the willingness of policymakers to cut $95 billion per month from asset holdings that had ballooned during the pandemic. This will probably keep dollar higher.

“The market has not been ready to embrace the fact that quantitative tightening may be much earlier than originally expected,” said Donnelly from analytics company Spectra Markets.

He said, “This should maintain stocks heavy and support the dollar into the May Fourth Fed meeting.”

The minutes of the European Central Bank’s March meeting will not include these hawkish plans. However, they might provide insights into how policymakers balance soaring inflation with slowing economic growth.

The Fed’s tone appeared to counter a more hawkish move by Australia’s central banks earlier in the week. It was pulled down overnight by 0.8% to $0.7503. It was at $0.6905 [AUD/]

With the stronger greenback, the yen was hovering at around 123.64 dollars per dollar. Sterling was held at $1.3076.

As higher interest rates threaten, there was a lot of selling in equities as well as other risk assets. Bitcoin fell by 5% overnight and dropped to $43,000 [MKTS/GLOB]

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Prices for currency bids at 0102 GMT

Description U.S. Pct Close Pct Change Pct High Low Bid

Previous changes

Session

Euro/Dollar

$1.0912 $1.0895 +0.16% +0.00% +1.0913 +1.0896

Dollar/Yen

123.6200 123.7850 -0.12% +0.00% +123.9300 +123.4750

Euro/Yen

134.88 134.85 +0.02% +0.00% +135.0400 +134.6600

Dollar/Swiss

0.9321 0.9327 -0.05% +0.00% +0.9334 +0.9320

Sterling/Dollar

1.3077 1.3069 +0.07% +0.00% +1.3080 +1.3065

Dollar/Canadian

1.2557 1.2544 +0.14% +0.00% +1.2567 +1.2543

Aussie/Dollar

0.7505 0.7509 -0.07% +0.00% +0.7570 +0.7500

NZ

Dollar/Dollar 0.6910 0.6916 -0.15% +0.00% +0.6920 +0.6906

All spots

Tokyo’s best spots

Europe’s top spots

Volatilities

Tokyo Forex Market Information from BOJ