The strengthening of the US dollar eased slightly following investor caution ahead of the release of the FOMC meeting minutes report and some economic data from the United States today (Wednesday).
This is an advantage for most major currencies and stock markets even though concerns about the Covid-19 outbreak in China still plague the market.
While waiting for the minutes of the meeting to be published, several Federal Reserve (Fed) officials have made statements regarding the direction of the next policy setting.
Cleveland Fed President Loretta Mester reiterated her earlier statement that lowering inflation remains critical for the central bank.
While Kansas City Fed President Esther George said the central bank may need to raise interest rates higher and leave them longer to lower inflation.
This indirectly shows that there are still policy makers who think the rate hike should continue and some are of the view that a slower increase is needed.
Turning to European currencies, the euro rose slightly against the US dollar amid mixed signals from European Central Bank (ECB) officials for an upcoming interest rate hike.
Most recently, ECB policy maker Olli Rehn said the ECB will continue to raise interest rates, but the rate of increase will be determined by the rate of inflation and overall economic conditions.
Investors are now looking forward to the release of manufacturing and services PMI data for the European and UK Zones in the European session and the United States in the New York session.
