The US dollar managed to log gains during the past trading week even though the currency has started trading from correction and had a confusing reaction to the Federal Reserve minutes.
The dollar was in a consolidation mode at the start of this week’s trading after the massive rally at the end of the preceding week. The minutes of the Fed’s October meeting complicated the matter further, leading to a softness of the currency. It was surprising as the notes looked rather hawkish. Some analysts theorized that the reason for reaction was the fact the policy makers remained divided about the timing of an interest rate hike. In fact, some of them thought that “it would be prudent for the Committee to consider options for providing additional monetary policy accommodation if the outlook for economic activity were to weaken to a degree that seemed likely to undermine continued progress in labor market conditions and impede the movement of inflation back to the Committee’s 2 percent objective over the medium term.”
Nevertheless, the greenback has ended the week with broad-based gains, rising both against the weak currencies, like the euro, and the strong ones, like the yen. The notable exception was the Australian dollar that was rising after the minutes of the Reserve Bank of Australia even though the notes mentioned possibility of additional monetary easing.
EUR/USD dropped from 1.0740 to 1.0644 — the lowest weekly close since April. USD/JPY rallied from 122.24 to 122.90, touching the weekly high of 123.75. AUD/USD gained from 1.5 percent from 0.7119 to 0.7234 over the week.
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