Dollar, bond yields gain after Fed minutes
By Herbert Lash
NEW YORK (Reuters) - The dollar hit a seven-year high against the yen on Wednesday and U.S. Treasury yields rose after minutes from the latest Federal Reserve meeting showed policy-makers remained worried about the global outlook, leaving them in a dovish stance.
Investors hoped to see whether the comments from policy-makers in October affirmed the more hawkish policy statement released at the time, which said the U.S. labor market was improving and inflation was unlikely to stay subdued for long.
But the tendency has been for the minutes to go the other way of the statement, said Robbert Van Batenburg, director of market strategy at Newedge in New York.
The minutes said "a couple of members suggested including language in the statement indicating that recent foreign economic developments had increased uncertainty or had boosted downside risks to the U.S. economic outlook."
"The wording would suggest greater pessimism," said Van Batenburg. "They didn't want to create fears."
While a dovish stance would suggest lower interest rates for a longer period of time, the prospect of a stronger U.S. economy than Japan or Europe gave the dollar a tendency to rise.
The yen weakened further after the minutes were released, with the dollar rising as high as 118.05 yen, its highest level since August 2007, and was last trading at 117.98.
The yen hit a six-year trough against the euro. The euro was little changed against the dollar, rising 0.03 percent $1.2540. Continued...