Dollar Gains On US Fed's Minutes
Washington (May 22) No decisions regarding policy normalization were taken; participants requested additional analysis from the staff and agreed that it would be helpful to continue to review these issues at upcoming meetings - FOMC minutes
The U.S. Dollar advanced versus the Japanese Yen for the first time in six sessions, as the U.S. central bank's meeting showed policymakers will continue reducing its stimulus programme, with stock markets also reacting positively on the announcement. The greenback climbed versus the Euro, while even a 0.1% appreciation against the Yen is already a good sign, keeping in mind recent strength of the Japanese currency.
Finally the U.S. policymakers began updating their strategy for a normalization of interest rates, as they showed intentions to slowly exits the more controversial aspects of monetary policy. The meeting has also marked the fourth straight reduction to monthly purchases, cutting the quantitative easing by another $10 billion to a total of $45 billion. Since Janet Yellen's comments about the upcoming rate hike, and the fact the QE will end this fall, investors' focus has shifted to the likely timing of the first adjustment in interest rates.
However, everything is not so smooth in the world's largest economy. Fed officials have raised a warning flag over the sector at the heart of the financial slowdown– the housing market. Policymakers see a variety of reasons for the prolonged weakness, including higher prices, short supply as well as construction bottlenecks, which were caused by cold winter.