FOREX-Dollar down as U.S. data weighs; traders await Fed minutes

By Saqib Iqbal Ahmed

NEW YORK, Nov 23 (Reuters) – The U.S. dollar fell across
the board on Wednesday, after data showed U.S. business activity
weakened further in November and as traders remained on edge
ahead of the impending release of minutes from the Federal
Reserve’s November meeting.

“Fed minutes will be the focus for today,” said Brad
Bechtel, global head of FX at Jefferies.

“This is the meeting where Powell had a relatively hawkish
press conference in which he indicated that if there had been an
SEP (Summary of Economic Projections) at this meeting they would
have definitely come out with a higher terminal rate. So the
meeting minutes are likely to get into detail around this
concept and therefore come with a hawkish bent,” Bechtel said.

After a headlong rush this year to raise interest rates, the
Fed switched this month to a more nuanced approach that was seen
as a compromise between officials most concerned about high
inflation and others worried that more large rises in borrowing
costs might crater the economy or stress key markets.

The minutes of the Nov. 1-2 policy meeting, scheduled to be
released later on Wednesday, may show just how deep any emerging
disagreement has begun to run at the U.S. central bank as it
ends the push to “front-load” rate increases and begins feeling
the way in smaller steps to an eventual stopping point.

The euro rose 0.6% against the dollar to $1.0362, on pace
for a second straight session of gains.

U.S. business activity contracted for a fifth straight month
in November, with a measure of new orders dropping to its lowest
level in 2-1/2 years as higher interest rates slowed demand.

Other data showed the number of Americans filing new claims
for unemployment benefits increased more than expected last
week, even though labor market conditions remain tight.

The dollar has rallied against every major currency this
year, boosted by the Federal Reserve’s supersized interest rate
hikes as it battles inflation. But recent cooler-than-expected
U.S. consumer price data has spurred investors’ hopes that the
Fed may be in a position to moderate its pace of hikes.

Against the yen, the dollar slipped 0.8% to 140.155 yen.

Sterling shot higher on Wednesday, rising for a second
straight day against a faltering U.S. dollar after preliminary
British economic activity data beat expectations, though it
still showed contraction was underway.

The pound was last up 1.14$ at $1.2018.

The New Zealand dollar hit a three-month high, after the
country’s central bank lifted interest rates by a record amount
despite warning the economy might spend an entire year in
recession.

The kiwi was up 1.1% on the day at $0.6221.

The Reserve Bank of New Zealand raised its benchmark rate by
75 basis points to 4.25% – the highest of any G10 economy – and
said it may need to increase faster than previously indicated.

Cryptocurrencies, which has come under intense selling
following the high profile collapse of crypto exchange FTX,
remained choppy, with bitcoin up 1.7% at $16,471.

(Reporting by Saqib Iqbal Ahmed
Editing by Nick Zieminski)