US Dollar whipsaws after Fed minutes

New York (Nov 18)  The euro wavered around $1.06 after the Federal Reserve's latest policy meeting, dipping up and down mid-afternoon. The dollar slipped slightly after it hit a fresh a seven-month peak against a currency basket earlier Wednesday.

Despite Wednesday's brief pullback, the dollar index was still up 2.7 percent so far this month, on track for its best monthly performance since March. Many analysts believed this afternoon's Fed minutes could be a major catalyst for another leg-up in the dollar.

Comments by Fed officials on Wednesday pertaining to an eventual lift-off in interest rates have cemented the view of a December move.

Atlanta Fed President Dennis Lockhart, a voting member of the Federal Open Market Committee, said it will be soon be appropriate to raise rates given that global financial markets have stabilized since the August turmoil.

New York Fed President William Dudley and Cleveland Fed President Loretta Mester more or less echoed Lockhart's sentiment.

"Today's minutes will help show whether the Fed's hawkish shift was unanimous or merely a majority decision, which could help traders better handicap the likelihood of a December rate hike," said Matt Weller, senior market analyst at FOREX.com in Grand Rapids, Michigan.

"It's worth noting that the Fed's meeting took place before the impressive October employment report, so any apprehension about dovish FOMC minutes may have faded since then anyway."

Futures traders have placed a 72 percent chance the Fed will raise rates at the December meeting, according to the CME Group's FedWatch on Wednesday.

U.S. Dollars
Dollar rise may not be as fast as you  think

The dollar index hit a fresh seven-month high of 99.80, before slipping down to 99.63. The dollar was up 0.11 percent against the yen at 123.56 yen, and was up 0.52 percent versus the Swiss franc at 1.019 francs

Data showing U.S. housing starts in October fell to a seven-month low hardly made a dent on the dollar. The upshot was that building permits rose, suggesting a generally solid housing market.

The single currency rose 0.6 percent to $1.0646, having dropped to a seven-month low of $1.0629 on Tuesday. The euro has been losing ground on expectations the European Central Bank will ease further in December, with many predicting it will reach parity with the dollar.

Source: CNBC