SINGAPORE (Reuters) – The dollar was firmer against its major peers on Thursday after minutes from the U.S. Federal Reserve’s September meeting affirmed expectations that the central bank is likely to continue raising interest rates this year.
The minutes from the Fed’s Sept. 25-26 meeting showed every Fed policymaker backed raising interest rates and also generally agreed borrowing costs were set to rise further, despite U.S. President Donald Trump’s view that the tightenings have already gone too far.
Interest - Rate - Futures - Percent - Likelihood
Interest rate futures are now pricing in an 83 percent likelihood that the Fed raises rates in December, according to the CME Group’s FedWatch Tool, the fourth hike this year. Two more increases are expected next year.
The dollar index , which measures its value against six major peers, traded at 95.65, up 0.08 percent on Thursday.
Dollar - Support - Post - Release - FOMC
“The dollar is being bid as there is follow through support post the release of the FOMC minutes,” said Ray Attrill, head of currency strategy at NAB.
“Dollar bulls are playing to the view that the market is under-pricing what the U.S. Fed can do,” added Attrill.
US - Treasury - Yields - Percent - Thursday
U.S. benchmark 10-year treasury yields climbed to 3.21 percent on Thursday, on increasing rate hike expectations. The last time they traded below the psychologically important 3 percent level was on Sept. 18.
Market focus is also trained on Rome, where the Italian government is headed for a showdown with Brussels over Italy’s insistence on pushing through a budget deficit target of 2.4 percent of GDP, wider than its previous target of 1.9 percent.
Italy - Draft - Budget - Year - Welfare
Italy’s draft budget for next year, which boosts welfare spending, cuts the retirement age and hikes deficit spending, could breach European Union’s fiscal rules that require Rome to lower its large public debt.
The blowout has sparked investor concerns about more political tensions in the euro zone between Brussels and the common currency’s member...
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