US Dollar Loses Steam After Fed’s Minutes

The US dollar was flat at the start of the Thursday’s trading session following Wednesday’s losses. The greenback dropped against most of major currencies and erased gains versus the euro during the previous trading session after the Federal Reserve’s policy minutes turned out to be more dovish than the market has anticipated.
The Federal Open Market Committee released minutes of its January meeting yesterday. The minutes were rather dovish, saying:

Many participants indicated that their assessment of the balance of risks associated with the timing of the beginning of policy normalization had inclined them toward keeping the federal funds rate at its effective lower bound for a longer time.

As for wording regarding ‘patience’, the Committee said:

Many participants regarded dropping the “patient” language in the statement, whenever that might occur, as risking a shift in market expectations for the beginning of policy firming toward an unduly narrow range of dates. As a result, some expressed the concern that financial markets might overreact, resulting in undesirably tight financial conditions. Participants discussed some possible communications by which they might further underscore the data dependency of their decision regarding when to tighten the stance of monetary policy.

All in all, it looks like US policy makers are willing to wait until economic recovery will be stable and are not in a hurry to start raising interest rates. And such sentiment is not good for the US dollar.
EUR/USD traded at 1.1401 as of 1:03 GMT today after opening at 1.1396. GBP/USD was near 1.5437 and close to its opening of 1.5434. USD/JPY traded at about 118.71, a bit lower than the opening rate of 118.78.

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