The US dollar jumped against the euro after the Federal Reserve released its monetary policy minutes yesterday, but was flat versus the Great Britain pound and the Japanese yen. Today, the greenback continued to trade sideways against the sterling, but fell a little versus the euro and slumped against the yen.
The Fed minutes revealed that US policy makers are going to proceed with quantitative easing tapering:
In their discussion of monetary policy in the period ahead, all members agreed that the cumulative improvement in labor market conditions and the likelihood of continuing improvement indicated that it would be appropriate to make a further measured reduction in the pace of its asset purchases at this meeting. Members again judged that, if the economy continued to develop as anticipated, further reductions would be undertaken in measured steps.
Some members of the Board believed that the current economic conditions warrant slower pace of stimulus reduction, while other thought that the size of asset purchases should be reduced further. Whatever the case, it looks like the Fed will proceed with QE tapering, and this is positive for the dollar.
Not everything was good for the greenback as the US housing data was rather bad, worse even than pessimistic expectations. As a result, the US currency was unable to maintain its rally.
EUR/USD was up a bit from 1.3732 to 1.3744 as of 2:08 GMT today. GBP/USD traded near its opening level of 1.6678, while USD/JPY sank from 102.31 to 102.01.
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