Dollar Climbs Most in a Month as Minutes Show Fed Tapering Seen

Bloomberg, (10/10) -- The dollar had the biggest gain in a month as minutes of the Federal Reserve’s last meeting showed most policy makers said the central bank was likely to reduce the pace of its $85 billion in monthly bond purchases this year. The U.S. currency rose for a second day versus the yen as President Barack Obama nominated Janet Yellen to run the Fed, fueling bets it will maintain policies to spur economic growth. The minutes of the Federal Open Market Committee meeting, which took place before the Capital Hill deadlock over the budget and debt limit, showed a lengthy debate over economic progress. The pound slid as U.K. industrial production unexpectedly shrank. “The FOMC minutes appear to have given a boost to the dollar as markets focus on the key headline that most FOMC members see tapering by the end of the year,” Vassili Serebriakov, a foreign-exchange strategist at BNP Paribas SA in New York, said in a phone interview. “Positions against the dollar have been vulnerable for a while and are starting to unwind.” The Bloomberg U.S. Dollar Index added 0.3 percent to 1,013.22 at 5 p.m. New York time and jumped as much as 0.6 percent, the biggest intraday advance since Sept. 5. It closed on Oct. 3 at 1,007.87, the lowest since Feb. 20. The greenback gained 0.5 percent to 97.34 yen and rose as much as 0.8 percent, the most since Sept. 19 on an intraday basis. The dollar appreciated 0.4 percent to $1.3524 per euro and touched $1.3486, the strongest level since Sept. 30. Europe’s shared currency rose 0.1 percent to 131.65 yen. The JPMorgan Global FX Volatility Index rose to 8.84 percent after falling yesterday to as low as 8.68 percent, the least since May 9. The 2013 average is 9.37 percent.