By Rae Wee
SINGAPORE, Feb 23 (Reuters) - The dollar stood near a
seven-week high against the euro and the Aussie on Thursday, as
expectations the Federal Reserve is likely to stay on its
aggressive rate-hike path, reinforced by minutes from its last
policy meeting, set the tone for markets.
Nearly all Fed policymakers favoured a scale down in the
pace of interest rate hikes at the U.S. central bank's last
policy meeting, minutes from the Jan. 31-Feb. 1 FOMC meeting
showed on Wednesday.
However, they also indicated curbing unacceptably high
inflation would be the "key factor" in how much further rates
need to rise.
The dollar paused its ascent on Thursday after gaining
broadly on the back of the release.
The euro edged marginally higher to $1.0608 on
Thursday, but was pinned near a roughly seven-week trough of
$1.0598 hit in the previous session.
Similarly, the Aussie rose 0.15% to $0.6815, after
falling more than 0.7% on Wednesday, further pressured by a miss
in forecasts for Australian wage growth last quarter.
Trading was thinned on Thursday with markets in Japan closed
for a holiday.
"The meeting minutes were pretty much within expectations
... the markets are now pricing for higher-for-longer rates,"
said Tina Teng, market analyst at CMC Markets.
"The resilience (of the U.S. economy) prompts the Fed to
keep raising interest rates ... pushing up the U.S. dollar."
Elsewhere, sterling steadied at $1.2046 after its
0.6% slide in the previous session, while the New Zealand dollar rose 0.1% to $0.6226.
The kiwi continued to draw some support from the Reserve
Bank of New Zealand's hawkish rate rise on Wednesday, after the
central bank signalled further tightening ahead to tame high
inflation.
Against a basket of currencies, the U.S. dollar index stood at 104.50, and was attempting to break a more than
one-month peak of 104.67 hit last week.
"The Fed is likely to stick with the majority view of 25bp
hikes, but the question is for how long," said strategists at
Macquarie.
"We expect that the answer will remain much more highly
dependent on the inflation data than the unemployment rate data,
insofar as the Fed can always rationalise a low unemployment
rate as the result of greater matching efficiency between
employers and workers seeking to fill job openings."
In Asia, the Japanese yen edged higher to 134.83
per dollar, with eyes now on incoming Bank of Japan (BOJ)
Governor Kazuo Ueda's speeches.
Ueda will speak in parliament on Friday and next Monday, and
could potentially offer some clues on how soon the BOJ could end
its bond yield control policy.
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(Reporting by Rae Wee; Editing by Lincoln Feast.)
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