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Read for 5 minutes TOKYO, Japan (Reuters) – On Thursday, the dollar stayed near a three-month high against key peers as minutes from the Federal Reserve’s June policy meeting revealed the world’s largest central bank is moving toward tapering its asset purchases as early as this year. PHOTO FROM THE FILE: This artwork from May 26, 2020 depicts a US dollar currency. REUTERS/Dado Ruvic/Illustration/File Photo/File Photo REUTERS/Dado Ruvic/Illustration/File Photo/File Photo The dollar index, which compares the greenback to six other currencies, was unchanged at 92.687 on Thursday, after reaching 92.844 for the first time since April 5. According to the minutes of the Federal Open Market Committee’s (FOMC) June policy meeting released Wednesday, substantial further progress on economic recovery “was generally seen as not having yet been met,” though participants expected progress to continue and agreed they must be ready to act if inflation or other risks materialize. According to the minutes, some attendees at the conference still believed that conditions for slowing bond-buying that is supplying markets with liquidity would be “met somewhat earlier than they had anticipated,” while others saw a less clear signal from incoming data. According to economists polled by Reuters, the Fed will publish a strategy for tapering its asset purchases in August or September. While the majority of respondents believe the first cut to its bond-buying program would happen early next year, nearly a third believe it will happen in the fourth quarter of this year. “The FOMC remains one of the more hawkish central banks under our coverage,” Commonwealth Bank of Australia strategist Carol Kong wrote in a client note, “and will begin to consider a taper at the policy meeting at the end of this month.” “As a result, we anticipate the USD to trade with an upward tilt.” The dollar was virtually unchanged at $1.17995 per euro, slightly off a three-month high of $1.17815 hit overnight after German data cast doubt on Europe’s economic rebound. The ZEW economic research center revealed that investor sentiment in Germany, the euro zone’s largest economy, declined dramatically in July, but it remained quite strong. President Christine Lagarde of the European Central Bank will hold a press conference later on Thursday after the monetary authority releases the results of an 18-month strategy review, which is expected to include a shift in the inflation target to 2% from “below but close to 2%” currently – which would theoretically allow for inflation overshoots. The dollar fell 0.3 percent to 110.300 yen in other trading, as the pair was pulled down by a drop in US Treasury yields. After falling below 1.2960 percent overnight for the first time since mid-February, the benchmark 10-year Treasury note yielded 1.3045 percent in Asia on Thursday. ” The drop in US yields adds to the complexity, but we see it primarily as… a re-calibration of inflation expectations following the Fed’s hawkish pivot “Westpac strategists wrote in a research note that policymakers surprised markets by signaling two interest rate hikes by the end of 2023 at the June meeting. The dollar index “remains a near-term buy on falls into 91.5-92.0,” according to the paper, and may rebound to 93.45, marking a new high since early November. The Australian dollar, which is usually regarded as a gauge for risk appetite, fell 0.3 percent to $0.74605, but remained near the middle of the three-week broad range. To lift inflation, Reserve Bank of Australia Governor Philip Lowe underlined on Thursday that the unemployment rate must fall further and remain in the low 4% range, an outcome not likely until 2024. The central bank had taken the first move toward stimulus tapering the day before, stating that the third round of its quantitative easing program would be less than the previous two. Meanwhile, the New Zealand dollar fell 0.5 percent to $0.69865, falling below the psychologically significant 70 cent threshold. Oil-linked currencies fell, with crude continuing to fall as OPEC+ talks on boosting output came to a halt, with Russia now attempting to help Saudi Arabia and the United Arab Emirates resolve their disagreements. For the first time since April 22, Canada’s loonie slipped to C$1.25285 per dollar. The crown fell to 8.7618 per dollar, its lowest level since December 21. ======================================================== At 05:49 GMT, currency bid prices were as follows: RIC RIC RIC RIC RIC RIC Pct Change in the Last U.S. Close YTD Pct High Bid Lowest Bidder Previous Alteration Session Euro/Dollar Dollar/Yen110.2750 110.6100 -0.33 percent +6.74 percent +110.6600 +110.2500Euro/Yen130.17 130.41 -0.18 percent +2.55 percent +130.5300 +130.1000Dollar/Swiss0.9246 0.9259 -0.14 percent +4.51 percent +0.9261 +0.9246Sterling/Dollar0.9246 0.9259 -0.14 percent +4.51 percent +0.9261 +0.9 1.3788 1.3801 -0.09% +0.93% +1.3804 +1.3775Dollar/CanadianDollar/CanadianDollar/CanadianDollar/CanadianDollar/CanadianDollar/CanadianDollar/Cana 1.2521 1.2484 +0.30 percent -1.66 percent +1.2529 +1.2479 +1.2529 +1.2479 +1.2529 +1.2479 +1.2529 +1.2479 +1 Aussie/Dollar 0.7462 0.7483 -0.28 percent -3.00 percent +0.7488 +0.7455NZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZ Dollar/Dollar 0.6988 0.7018 -0.48 percent -2.74 percent +0.7019 +0.6976 -0.48 percent -2.74 percent Each and every location Locations in Tokyo, Europe Volatilities BOJ provides information on the Tokyo foreign exchange market. Kevin Buckland contributed reporting, while Shri Navaratnam and Kim Coghill edited the piece./nRead More

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