Title: Dollar Remains Near 20-Year High; Fed Minutes Hawkish
Jul 07, 2022 03:09AM ET
The U.S. dollar gave back some of its gains from the previous day in early European trading on Thursday, but remained near its 20-year high as the Federal Reserve maintained its hawkish stance.
At 03:10 AM ET, the dollar index, which tracks the greenback against a basket of six other currencies, was trading 0.2% lower at 106.73 after rising to a 20-year high of 107.27 overnight.
The index is up nearly 12% so far this year and is on track for its best year since 2014.
There are many factors driving the dollar's gains, but the most important is the aggressive tightening of monetary policy by the Federal Reserve, which is facing the worst inflation in decades.
Minutes of the last Fed meeting, released Wednesday, indicated the possibility of "even tighter" monetary policy to prevent prolonged inflation, and now investors are expecting another 75 basis point rate hike in July.
EUR/USD rose 0.2% to 1.0197, recovering after falling as low as 1.0160 on Wednesday for the first time since late 2002, as Europe's energy woes threatened the region's economic outlook.
GBP/USD increased 0.3% to 1.1961, close to a two-year low, as British Prime Minister Boris Johnson battles for his job amid a growing rebellion within his party
The USD/JPY fell 0.1% to 135.81, with the Japanese yen, another safe haven, in demand, while the risk-sensitive AUD/USD rose 0.5% to 0.6807 on the back of a rebound in global equity markets.
Poland's central bank is expected to raise interest rates for a 10th straight day on Thursday in a bid to curb inflation. Most economists surveyed by Bloomberg expect the central bank to raise its key rate by 75 basis points, to 6.75%