Dollar sinks on Fed inflation fears, weak data and technicals

Dollar sinks on Fed inflation fears, weak data and technicals

The release of minutes from the Federal Reserve's most recent policy meeting, weak USA data and technical trading aligned to send the dollar tumbling against both safe-haven and risky currencies.

"Gold was one of the chief beneficiaries of the ensuing general dollar sell-off (on Wednesday) as the United States heads into its Thanksgiving break".

While the US central bank left its benchmark interest rate unchanged at the previous meeting, the Fed did however maintain positive language on the current state of the USA economy.

The markets also witnessed low volumes ahead of the Thanksgiving holiday on Thursday.

Meanwhile, silver was down 0.4 percent at $17.088 an ounce, platinum fell 0.6 percent to $932.50 an ounce, while palladium was down 0.1 percent at $1,002.05 an ounce. Many Fed officials saw a rate increase near-term, however many were concerned about weakening inflation and when it would rebound.

"I think it's pretty conclusive now, that as we move into 2018, the Fed is going to be focusing on (low) inflation rather than growth so this is still the overriding concern", said Stephen Innes, head of trading in Asia Pacific for Oanda in Singapore.

In currencies, the dollar touched a two-month low against the yen and hit a one-month trough against a basket of six major currencies on Thursday.

That raises the question of whether the Fed will stick to three planned rate increases in 2018.

The Fed left its benchmark interest rates unchanged earlier this month, but did leave the door open for a December rate hike.

Powell must be confirmed by the Senate before assuming his new post.

Spot gold was up 0.9 percent at $1,292.32 an ounce by 1:38 p.m. EST (1838 GMT), while USA gold futures for December delivery settled up $10.50, or 0.8 percent, at $1,292.20 per ounce.

The dollar .DXY dipped after data showed new orders for key USA -made capital goods unexpectedly declined in October.

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