Dollar stung by FED minutes, commodity currencies outperform

09/06/2016 02:44 AST

The dollar started trade in Asia on Friday under a cloud, having come under renewed pressure after minutes of the Federal Reserve's September meeting reinforced doubts that the central bank will hike interest rates this year.

The minutes revealed a deeply cautious central bank that delayed a long-anticipated tightening because policymakers wanted to make sure that a global economic slowdown would not threaten to derail a U.S. recovery.

"The minutes were viewed as mirroring the dovish tone to the September 17 Fed statement rather than the more hawkish message delivered by a number of Fed speakers in the aftermath of the meeting," analysts at Barclays wrote in a note to clients.

The dollar index briefly dipped below 95.000 for the first time since Sept. 19, but edged back to 95.226. It was down 0.6 percent for the week so far, taking losses over the past two weeks to about 1.0 percent.

The euro fetched $1.1291, having reached a three-week high of $1.1328 overnight. Against the yen, the greenback drifted down to 119.91, but remained within a well-worn 119.00-121.00 range seen in the past few weeks.

Commodity currencies were the winners, with the Australian and New Zealand dollars on the verge of making new highs.

The Aussie traded at $0.7254, after coming within a whisker of its September peak of $0.7280. A break above would take it back to levels last seen in late August.

The kiwi dollar stood at $0.6660, having come close to its August peak of $0.6708. It has rallied around 7 percent since finding a floor at $0.6235 on Sept. 23.

The 'dovish' minutes also inspired gains on Wall Street and for risk assets, sitting at odds with the Fed's concerns about the health of the global economy.

Data out of Germany on Thursday was sobering, showing exports in Europe's largest economy plunged in August by the most since the height of the global financial crisis.

There is little in the way of market-moving economic data out of Asia on Friday. Australian home loan figures at 0030 GMT could provide a bit of distraction, but are unlikely to change the course of the broader market.

Investors will also be keeping an eye on Chinese markets and whether stocks there can sustain Thursday's bounce.

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