3 Minutes to Read TOKYO, Japan (Reuters) – On Thursday, the dollar rose to near three-month highs against key rivals after minutes from the Federal Reserve’s June policy meeting revealed the world’s largest central bank is working toward tapering its asset purchases as early as this year. PHOTO FROM THE FILE: During a picture opportunity at the Korea Exchange Bank’s headquarters in Seoul on April 28, 2010, an employee counts one hundred US dollar bills. Jo Yong-Hak/File Photo/REUTERS The dollar index, which compares the greenback to six other currencies, remained unchanged at 92.702, slightly altered from Wednesday’s high of 92.844, the highest level since April 5. According to the minutes of the Federal Open Market Committee’s (FOMC) June policy meeting, 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, “a number of participants” at the session still believed that requirements for curbing bond-buying, which is infusing markets with liquidity, would be “met somewhat earlier than they had anticipated,” while others saw a less clear signal from incoming data. “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 trading at $1.1792 per euro, down from a three-month high of $1.17815 reached yesterday, when 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 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 the current “below but close to 2%” – which would theoretically allow for inflation overshoots. The dollar was slightly lower at 110.555 yen elsewhere, as the pair was pulled down by a drop in US Treasury yields. In Asia on Thursday, the benchmark 10-year Treasury note yielded 1.3079 percent, after falling to 1.2960 overnight for the lowest time since mid-February. The Australian dollar, which is usually regarded as a gauge for risk appetite, fell 0.1 percent to $0.74745, but remained towards the middle of the three-week broad range. Governor Philip Lowe of the Reserve Bank of Australia speaks about the labor market and monetary policy later Thursday, a day after the central bank announced that a third round of its quantitative easing program will be less in magnitude than the previous two. Kevin Buckland contributed reporting, and Shri Navaratnam edited the piece./n
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