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US dollar surges on bullish Fed minutes

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The US dollar jumped on Wednesday after the minutes to the Federal Reserve's end-April meeting showed the central bank far more bullish about a possible June rate hike than markets had understood.

[NEW YORK] The US dollar jumped on Wednesday after the minutes to the Federal Reserve's end-April meeting showed the central bank far more bullish about a possible June rate hike than markets had understood.

Markets had dismissed a June rate hike as a 5 per cent possibility just last week, but rate derivatives indicated that chance jumped to about 34 per cent after the minutes were released.

Short-term Treasury bond yields surged and the dollar jumped 0.8 per cent to US$1.1218 against the euro, and 1.0 per cent to 110.20 yen.

"The release was significantly more hawkish than many had expected, notably stressing that a June interest rate hike would be likely if economic growth data continues to progress as expected," James Chen of Forex.com said.

The British pound meanwhile continued its climb, rising 1.1 per cent on the dollar before the Fed report and then giving back only a little to end the day up 0.9 per cent at $1.4599.

AFP