The dollar advanced to the highest level in one week versus the euro after Goldman Sachs announced its projection for increased U.S. borrowing costs and the market waited for the minutes of the Federal Reserve’s June meeting this week.
The U.S. currency rallied 0.1 percent to trade at $1.3582 per euro by 7:02 a.m. in London trading after earlier surging to $1.3580, the most since June 26. The dollar rose to 102.10 yen from 102.06 earlier while the euro remained slightly unchanged at 138.67 yen.
“What the market’s looking for is an indication that the FOMC debate is maybe getting a little bit livelier,” Sam Tuck, a senior currency strategist at ANZ Bank New Zealand Ltd in Auckland, told Bloomberg. “Should we see that, obviously we’d expect the U.S. dollar to start strengthening a little bit more.”
FOMC stands for the Federal Open Market Committee.
The dollar has benefited from Thursday data that showed that U.S. nonfarm payrolls grew more than expected in June, an indication that the economy is getting stronger. The Federal Reserve is expected to publish the minutes of its monthly policy meeting held on June 17-18 on Wednesday.
Fed’s officials have retained the benchmark interest rate between zero to 0.25 percent since Dec. 2008 in order to boost growth, while tapering the monthly asset purchase program to $35 billion from $85 billion beginning 2013.
Goldman Sachs Group Chief Economist Jan Hatzius projected on Sunday that U.S. policymakers may increase the benchmark interest rate starting in the third quarter of 2015, rather than the first three months of the year. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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