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US dollar slumps ahead of Fed meeting minutes

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The US dollar slumped on Tuesday as dealers awaited the release of minutes from the Federal Reserve's last meeting, while an overnight jump in oil prices lifted emerging Asian currencies.

[TOKYO] The US dollar slumped on Tuesday as dealers awaited the release of minutes from the Federal Reserve's last meeting, while an overnight jump in oil prices lifted emerging Asian currencies.

The US central bank is on Wednesday due to release minutes of its July 26-27 meeting, when it left key interest rates unchanged.

But the Fed acknowledged an improved performance in the world's top economy, suggesting a rate hike may still be on the horizon this year.

A rise in borrowing costs would tend to stoke demand for dollar-denominated assets, boosting the greenback.

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Market voices on:

"The market really has not moved to price in any more chance of Fed tightening," Daniel Katzive, head of foreign-exchange strategy for North America at BNP Paribas, told Bloomberg News.

"That's sapped the dollar of any momentum."

In Tokyo the dollar slipped to 100.44 yen from 101.25 yen Monday in New York and its lowest level in about a month, while the euro was at US$1.1191 against US$1.1183.

The common currency weakened to 112.41 yen from 113.23 yen in US trade.

The pound traded at US$1.2902 against US$1.2883 in the US, still near its weakest levels in more than 30 years touched in the aftermath of Britain's June vote to leave the European Union.

The dollar also dropped against higher-yielding emerging market currencies, which benefited from stronger oil prices and an uptick in investor sentiment.

The oil-linked Malaysian ringgit, the South Korean won, Singapore and Taiwan dollars, Philippine peso and Indonesian rupiah all rose against the US unit.

"A recovery in risk appetite is sending emerging currencies stronger," said Wu Mingze, a Singapore-based foreign-exchange trader at INTL FCStone Inc.

"Commodities are rallying, lifting stock prices and commodity currencies."

AFP

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