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Dollar Gains Slightly Against Yen In Early Asia After Fed Minutes

11/23/2017, 10:13:50 AMBasics of Trading
Dollar Gains Slightly Against Yen In Early Asia After Fed Minutes

The dollar edged higher against the yen in early Asia on Thursday heading into the Thanksgiving holiday in the US with investors chewing over the latest minutes from the Fed that expressed optimism about the economy and concern about financial markets.

USD/JPY changed hands at 111.24, up 0.02%, while AUD/USD traded at 0.7615, down 0.08%.

Federal Reserve officials expressed largely optimistic views of economic growth at their most recent meeting but also started to worry that market prices are getting out of hand and posing a danger to the economy.

Minutes from the November Federal Open Market Committee meeting indicated solid views on growth – the labor market, consumer spending and manufacturing all were showing solid gains. While there were disagreements on the pace of inflation, sentiment otherwise was largely positive.

“In their discussion of the economic situation and the outlook, meeting participants agreed that information received since the FOMC met in September indicated that the labor market had continued to strengthen and that economic activity had been rising at a solid rate despite hurricane-related disruptions,” the minutes stated.

However, when it came to evaluating market conditions, the talk took a more cautious tone.

“In light of elevated asset valuations and low financial market volatility, several participants expressed concerns about a potential buildup of financial imbalances,” the minutes stated. “They worried that a sharp reversal in asset prices could have damaging effects on the economy.”

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last quoted down 0.79% to 93.15.

Overnight, the dollar fell against a basket of major currencies pressured by a rebound in the euro as fears that the German collation collapse would weigh on the European economy eased.

The dollar struggled to stem losses against the euro as traders appeared to unwind their bearish bets on the euro which followed German chancellor Angela Merkel’s failure to form the country’s next government.

Meanwhile a mixed bag of economic reports on jobs and durable goods orders did little to lift sentiment on the greenback.

The U.S. Department of Labor reported Thursday that initial jobless claims fell 13,000 to a seasonally adjusted 239,000 for the week ended Nov. 18, missing forecasts of a 10,000 increase.

The Commerce Department said on Wednesday non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, fell 0.8% last month after an upwardly revised 2.4% increase in September.

The duo of reports come ahead of the release of the Federal Open Market Committee (FOMC) minutes for the November meeting due at 2 p.m. ET.

Elsewhere, sterling added to recent gains against the dollar after UK Chancellor Philip Hammond revealed the government’s latest budget