Dollar on defensive after Fed minutes dampen rate hike prospects

Dollar on defensive after Fed minutes dampen rate hike prospects”

Fed Chairwoman Janet L. Yellen has attributed the recent slowdown in inflation mostly to temporary factors, such as lower costs for cellphone plans.

While the minutes of the Fed's July meeting were, on the surface, seen as dovish given the focus on the recent decline in inflation pressure and retail sales softness, the details were decidedly less so.

One group of Fed policymakers felt inflation was falling too low and argued for caution in raising interest rates.

The takeaway: A growing cohort at the Fed is frustrated that financial conditions have continued to ease since rate hikes began in 2015. Looking at the latest trading in forex markets, dollar/yen was down at 109.83, euro/dollar inched down to 1.1761 and sterling was broadly flat at $1.2890.

Trump announced the breakup of the advisory councils after 3M Co.'s Inge Thulin became the latest of several chief executives to leave Trump's American Manufacturing Council, and the president's Strategic and Policy Forum broke up of its own will.

Dow e-minis were down 21 points, or 0.1 percent, with 13,322 contracts changing hands.

Europe's main stock markets eased at the start of trading on Thursday, with London's benchmark FTSE 100 index down ahead of key United Kingdom retail sales data.

Metals markets were buoyant, with the price of zinc, used to galvanise steel, hitting its highest in a decade on Chinese infrastructure demand.

Data out on Thursday showed Australia's jobless rate edged lower to 5.6 percent in July from an upwardly revised 5.7 percent as 27,900 new jobs were added. While there were more people employed in July, it was driven by part-time jobs as the amount of permanent jobs fell by more than 20,000.

Lower wage growth was also a concern for Dudley because it impacts inflation growth.

The euro fell 0.5 percent to 1.1706 against the greenback after gaining 0.1 percent to $1.17820 in early Asian trade, and regaining from prior day's losses of $1.1681, its lowest level in nearly three weeks, while the British pound declined by 0.1 percent to 1.2864.

The euro also dropped Wednesday after Reuters reported that ECB President Mario Draghi won't deliver a fresh policy message at the Fed's Jackson Hole conference in Wyoming next week. The report is expected at 8:30 a.m. ET (1230 GMT). The company attributed its poor performance in the first half of the year to increased competition and higher fuel prices.

- West Texas Intermediate crude fell 1.7 percent to $46.75 a barrel. Among European lenders, shares of Deutsche Bank AG (DBK.XE) fell 1.8%, Banco Santander SA (SAN) lost 1.4%.

"Market participants have been concerned that rising production in North America will continue to counterbalance OPEC and Russia's efforts to freeze output to support oil prices", said Margaret Yang Yan, an analyst at CMC Markets Singapore.

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