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USD gains after Fed minutes

Daily Currency Update

The US dollar was little changed on Thursday after yesterday's gains on the back of hawkish commentary from the US Federal Reserve. The minutes to the Federal Open Market Committee (FOMC) March meeting released yesterday signaled that Fed policymakers are prepared to act more quickly to contain rampant inflation with aggressive interest rate rises and the rapid shrinking of the Federal Reserve’s balance sheet.

Some analysts suggest that this will likely mean one or two 50-basis-point interest rate hikes in the future, which would bring the interest rate up to 2.5% – 3% by the end of the year. The news hasn’t supported the US dollar’s recent gains as caution has now entered the market around how this move could cut growth in the world’s largest economy, and the roll-on effect on global growth.

Initial jobless claims for the week ended April 1 was also released today, which declined to 166K, beating market expectations. The US Dollar Index was sitting at 99.63 at the time of writing.

Key Movers

EURUSD retraced back to the 1.0900 area on Thursday following a slight boost after the European Central Bank released its account of the March policy meeting. Increased sanctions on Russia, and Ukraine’s call on the West to do more and implement sanctions that are economically destructive enough for Russia to end the war, have continued to weigh on the euro.

The Canadian dollar fell against the US dollar on Thursday ahead of the 2022 federal budget set to be announced at 4 p.m. eastern time. The currency declined as investors weighed the Fed's hawkish comments on Wednesday, which buoyed the US dollar. USDCAD was up 0.43%, trading at 1.2594 at the time of writing.

Expected Ranges

  • EUR/USD: 1.087 - 1.0935 ▲
  • GBP/USD: 1.3053 - 1.3104 ▼
  • AUD/USD: 0.7469 - 0.7542 ▼
  • USD/CAD: 1.2502 - 1.261 ▲