The dollar lost steam on Thursday after the release of the Federal Reserve’s last policy meeting took a dovish tone. The minutes showed that most Fed policymakers believe another interest rate hike is probably necessary, and that the Fed would accept inflation rising above its goal for a limited period.
The dollar responded by retreating against its primary trading partners. As of 1:30 p.m. HK/SIN, the dollar was down modestly against the euro to $1.1702. The greenback also slid 0.60 percent against the yen to 109.41, after falling 0.73 percent against the yen on Wednesday, its steepest decline in nearly three months. The dollar index was down 0.08 percent to 93.87 .DXY.
Putting additional pressure on the dollar was Trump who is rumored to be considering new tariffs on cars. The potential tariffs come days after U.S. Treasury Secretary Steven Mnuchin said that the U.S.-Sino trade war was “on hold.” Asian shares also fell on Thursday, prompted by a U.S. government national security probe into auto imports which is the force behind the proposed new tariffs. The investigation is being led under Section 232 of the Trade Expansion Act of 1962 which authorizes the Secretary of Commerce to launch comprehensive investigations into the effects of imports of any items on the national security of the U.S.
The Nikkei 225 was down 1.40 percent in the early afternoon after falling over 1 percent on Wednesday. The Shanghai Composite and the Kospi were both in the red, as was the ASX 200, though their losses paled in comparison to that of the Nikkei 225. Only the Hang Seng Index was in the green, gaining 0.02 percent.