US Dollar Gets a Boost as FOMC Minutes Indicate Interest in Tapering Stimulus Soon

The US dollar is trading strong, rising to multi-month highs against other leading currencies following the release of July's FOMC meeting

Aiswarya Gopan•Thursday, August 19, 2021•1 min read

US Dollar Gets a Boost as FOMC Minutes Indicate Interest in Tapering Stimulus Soon

The US dollar is trading strong, rising to multi-month highs against other leading currencies following the release of July’s FOMC meeting minutes which revealed that most of the policymakers from Fed are keen to start tapering asset purchases within this year. At the time of writing, the US dollar index DXY is trading at around 93.40.

The common currency has slid under the $1.17 mark against the greenback while commodity currency NZD has fallen under $0.69 after the minutes released. Meanwhile, the DXY is holding close to highs last seen in early April.

In its most recent policy meeting, Fed officials expressed interest in beginning the process of dialing back on monetary stimulus as long as the pace of economic recovery was maintained. However, they did reiterate that the labor market still had a long way to go towards reaching the goal of maximum employment.

The likelihood of tapering stimulus efforts and bond purchases is supporting the US dollar as it looks like the Fed will be the first among the biggest central banks to reverse its dovish strategy. On the other hand, other central banks like the ECB are nowhere close to beginning discussions on turning around on stimulus measures yet.

Investors now turn their attention to the upcoming Jackson Hole symposium scheduled towards the end of the month for any clues on when the process of tapering will actually begin. Expectations are high that Fed chair Powell could share a timeline by when the US central bank could start tapering its asset purchase program, reducing the amount of cash flowing in the economy and boosting the appeal of the US dollar among global investors.

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ABOUT THE AUTHOR See More

Aiswarya Gopan

Financial Writer & Editor - Asia & Europe Desk

Aiswarya Gopan is a former cybersecurity analyst, tech journalist and market researcher, who joins FX Leaders with over three years of experience in the blockchain industry. Aiswarya's areas of focus include market news out of the Asian and European markets as well as news coverage on cryptocurrencies.