EUR/USD trades in tight range as Fed minutes reveal growth worries

The euro traded in an extremely tight range against the US dollar on Wednesday, showing little reaction to the release of the US Federal Reserve (Fed) minutes of its policy making committee meeting from late October.

The Fed meeting minutes revealed that US monetary policy makers had significant concern over the health of the US economy. A majority of the committee voted to ease interest rates, cutting the official overnight Fed Funds interest rate for the third time this year.

Greenback propped

What has been propping up the greenback since then, however, is that the Fed signaled it would be pausing its interest rate easing efforts to ascertain their impact on the economy, leading the markets to assume that US rates will likely remain stable well into next year. Futures and swaps markets are pricing in a quarter point Fed easing in the third quarter of next year.

The US dollar has thus generally been strong in recent weeks, with the Yen the only major currency to gain against the greenback, a small 30-day advance of just 0.14%.

EUR/USD was trading around $1.1075 in late New York trade, little changed from sessions earlier this week.

USD/CAD testing key resistance

The greenback back continued to advance strongly against the Loonie Wednesday, resuming a rally began Tuesday after a speech by the Bank of Canada’s (BoC) deputy governor was interpreted as dovish for Canadian monetary policy.

The BOC has stood on the sidelines as the Fed has eased this year, leading to relatively higher Canadian interest rates that have supported the Loonie, which is up over 3% against the US dollar since January.

USD/CAD tested key resistance levels near $1.33 several times during Wednesday’s New York session and was again trading near there in early Thursday Asia trade.