The dollar hovered near a two-year high against a basket of majors on Thursday and pushed commodity currencies further down from recent peaks, after meeting minutes showed the Federal Reserve preparing to move aggressively to head off inflation.
The US dollar index, which measures the greenback against six currencies, held at 99.546 in Asia trade, close to Wednesday’s top of 99.778 which was its highest since May 2020.
The Australian and New Zealand dollars fell about 0.4% to sit more than 2% beneath highs struck on Tuesday as the Fed’s tone has offset a hawkish shift from Australia’s central bank.
The euro scraped itself from a one-month trough of$1.0874 to hit $1.0912 in the Tokyo afternoon, but remains under pressure as minutes from the European Central Bank due later in the day are unlikely to sound as decisive as the Fed’s.
Minutes from the March Fed meeting showed “many “participants were prepared to raise interest rates in 50-basis-point increments in coming months.
They also showed general agreement about cutting $95 billion a month from asset holdings which had ballooned during the pandemic.
That was more or less in line with market expectations, but policymakers’ preparedness to begin as soon as May was confronting and will likely keep the dollar elevated.
“The minutes lend support to the view that peak-hawk has not been reached at the Fed just yet,” said analysts at OCBC Bank in Singapore.