TOKYO – The US dollar traded near more than two-week troughs versus major peers on Thursday, tracking Treasury yields lower, after minutes of the Federal Reserve’s March policy meeting offered no new catalysts to dictate market direction.
Fed officials remained cautious about the risks of the pandemic – even as the US recovery gathered steam amid massive fiscal stimulus – and committed to pouring on monetary policy support until a rebound was more secure, the minutes showed Wednesday.
The dollar index which measures the greenback against a basket of six currencies, was little changed at 92.425 early in the Asian session, after dipping to as low as 92.134 on Wednesday for the first time since March 23.
The gauge rallied to an almost five-month high at 93.439 at the end of last month as the US pandemic recovery outpaced most other developed nations, particularly Europe.
“Hard to argue that the US macro outperformance trade is exhausted; the strong vaccine drive, reopening and stimulus set to produce some exceptionally strong rebound data in the next several months,” Westpac strategists wrote in a report, forecasting a run at 94.5 for the dollar index, also known as DXY.
“Admittedly though, the next DXY upleg may take a few weeks before it develops momentum – a lot of good news is priced in.”
The benchmark 10-year Treasury yield was around 1.67 percent on Thursday, after dipping below 1.63 percent overnight. It hit a more than one-year top of 1.776 percent late last month.
The S&P 500 eked out a modest gain on Wednesday, moving mainly sideways since surging to a record high to start the week. – Reuters