The dollar rises after the Fed minutes

The dollar rose against the euro on Wednesday, particularly after the publication of the Fed minutes, which show a certain caution from the monetary committee of the Federal Reserve with regard to the evolution of rates and inflation.

Around 8:00 p.m. GMT, the dollar rose 0.19% to 1.0921 dollars per euro. The Dollar Index, which compares the greenback to a basket of currencies, gained 0.24% to 102.44 points.

The yen fell significantly, losing 0.68% against the euro to 156.44 yen per euro. Against the dollar, it fell 0.87% to 143.24 yen.

The report of the last monetary meeting of the American central bank on December 13 takes a cautious tone on the evolution of inflation.

Several participants reaffirmed that monetary policy should remain “restrictive for some time until inflation clearly falls back to its target.”

Fed members say they “need to see more evidence that inflationary pressures are easing to be certain that inflation is returning toward 2%.”

Although in their average projections of the evolution of key rates, Fed officials have forecast rate cuts, they also highlight “an unusually high degree of uncertainty.”

During this meeting, the Fed left the cost of money unchanged between 5.25% and 5.50%, the highest in 22 years.

“Nothing suggests in these minutes that the Fed is comfortable with the idea of rapid rate cuts,” commented Chris Low, chief economist for FHN Financial.

“While most participants forecast that rate cuts could occur by the end of 2024, several suggest that rates could remain at their current level longer than expected,” added the analyst.

The market is also on alert awaiting other economic data this week which will influence the dollar.

On Thursday the monthly report on job creations in the private sector for December will be published.

“U.S. employment data could once again tip the balance toward greater risk appetite if the numbers reveal a further slowdown in the U.S. labor market,” says Ricardo Evangelista of ActivTrades.

Official employment figures for December are expected to be announced on Friday. Analysts expect a slight slowdown in job creation to 162,000 compared to 199,000 in November. The unemployment rate is expected to stand at 3.8% compared to 3.7%, according to forecasts from

The British pound was moving higher, despite the publication of data showing declines in inflationary pressures. The market believes that it is still too early to foresee rate cuts from the Bank of England (BoE).

The pound sterling gained 0.15% against the euro to 86.59 pence per euro.

UK store price inflation remained stable in December, at 4.3% year-on-year, but at its lowest level since June 2022, according to the BRC-NielsenIQ store price index published on Tuesday.

“The overall data continues to convincingly indicate an easing of inflationary risks,” comments Derek Halpenny, analyst at MUFG.

“However, it is unlikely that the BoE will change its monetary policy discourse any time soon,” underlines the analyst.

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Beth Malcolm

Beth Malcolm is Scottish based Journalist at Heriot-Watt University studying French and British Sign Language. She is originally from the north west of England but is living in Edinburgh to complete her studies.