The Aussie dollar dropped after the Reserve Bank reiterated it expects to keep its benchmark at a record low and a report that investment into China unexpectedly declined. The yen fell against the U.S. and European currencies.
The Bloomberg Dollar Spot Index advanced after falling yesterday to match the lowest close this month before Federal Reserve officials begin a two-day gathering. The pound was near a five-year high as prospects the Bank of England is moving closer to raising borrowing costs supported demand for the currency. Australian policy makers expressed concern that low interest rates may not offset a drop in mining investment as currency strength weighs on the economy.
“The minutes read a little bit more dovish to me in the sense that they are a little more uncertain about the outlook,” said Jonathan Cavenagh, Singapore-based currency strategist at Westpac Banking Corp. “It’s taken by the market as more of a dovish signal from the RBA because on balance, it still means that if there was to be another interest rate move in the next six months, it’s more likely to be a cut rather than a hike.”