Doubts About Interest Rate Hike Make US Dollar Underperform

The US dollar demonstrated an unimpressive performance during the past trading week. While the currency ended trading little changed versus the Japanese yen, it sank against other majors and commodity currencies. The Federal Reserve was the main perpetrator in the greenback’s slump.
The Fed released minutes of its September meeting on Thursday. Initially, the dollar was reacting positively to the release, but this changed very quickly. Traders digested the announcement and decided that its tone was dovish enough to believe that the central bank is reluctant to start monetary tightening in the near future.
On Friday, several US policy makers, including Dennis Lockhart and Stanley Fischer, attempted to reassure markets that a rate lift-off is still possible this year. Yet it looks like the majority of market participants remained unconvinced.
The dollar tumbled against other major currencies (with the exception of the yen) as a result of the not-so-hawkish outlook.
EUR/USD rallied 1.4 percent from 1.1218 to 1.1355. GBP/USD climbed from 1.5190 to 1.5318. USD/JPY ticked up from 119.99 to 120.23.

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