Dollar up ahead of Fed minutes

Dollar up ahead of Fed minutes_source:AFP

All eyes were on the publication of minutes, scheduled for later Wednesday, of the latest Federal Reserve meeting which Fed watchers will dissect in their search for insights into the central bank's thinking.

All things being equal, higher interest rates bolster the dollar as holding the currency becomes more attractive.

Barring any surprises in the minutes, "the greenback could be on the verge of a more significant comeback," predicted Fawad Razaqzada, an analyst at Forex.com.

The dollar stood comfortably firm against the euro and the yen as well as against the pound sterling which came under pressure after Britain reported rising unemployment.

The weaker pound, in turn, boosted London stocks, with the FTSE outperforming its European peers.

Paris posted small gains at the close, but Frankfurt fell "after a string of disappointing" eurozone manufacturing numbers, noted Connor Campbell, financial analyst at Spreadex trading group.

The share prices of mining giant Glencore and Lloyds Banking Group (LBG) enjoyed solid gains following well-received earnings updates.

Wall Street was firmer approaching midday in New York.

FED MINUTES

Later on Wednesday, the Fed minutes will be closely scrutinised for clues about the pace of US interest rates expected this year.

Stephen Innes, head of Asia-Pacific trading at OANDA, said that "while the prospect of higher interest rates will keep investors on edge, it's not like we're returning to double-digit levels".

Briefing.com analyst Patrick O'Hare noted that the Fed minutes come from the policy meeting held just before the strong Feb 2 jobs report was released, igniting a stock market selloff on worries over accelerated rate hikes.

"With the market knowing what it knows now, the minutes will likely prove nettlesome if they connote a hawkish tone," O'Hare said.

Elsewhere, both main oil contracts were lower as a stronger dollar hit recent gains for crude.

Key figures around 1640 GMT:

London - FTSE 100: UP 0.5 per cent at 7,281.57 points (close)

Frankfurt - DAX 30: DOWN 0.1 per cent at 12,470.49 (close)

Paris - CAC 40: UP 0.2 per cent at 5,302.17 (close)

EURO STOXX 50: DOWN 0.1 per cent at 3,430.16

New York - DOW: UP 0.5 per cent at 25.090.75

Tokyo - Nikkei 225: UP 0.2 per cent at 21,970.81 (close)

Hong Kong - Hang Seng: UP 1.8 per cent at 31,431.89 (close)

Shanghai - Composite: Closed for public holiday

Euro/dollar: DOWN at US$1.2307 from US$1.2336 at 2200 GMT

Pound/dollar: DOWN at US$1.3944 from US$1.3995

Dollar/yen: UP at 107.70 yen from 107.32 yen

Oil - Brent North Sea: DOWN 7 cents at US$65.18 per barrel

Oil - West Texas Intermediate: DOWN 30 cents at US$61.49