Euro higher ahead of Fed minutes

The euro firmed against the dollar as investors
eye the release of last month’s Fed policy meeting minutes on
Wednesday (August 21st).

EUR/USD climbed to 1.3356 overnight on Tuesday, the
pair’s highest in a week, though gains were capped as US 10-year
Treasury yields continued to rise.

The euro is now trading at its highest against the greenback since
mid-June, when Fed chairman Ben Bernanke first outlined
the central bank’s intentions to dial back stimulus this year.

Minutes from the Fed’s July meeting are expected to raise
expectations the US central bank will begin tapering asset
purchases soon, possibly in September.

Monday had also seen the euro gain on the greenback after a report
from Germany’s Bundesbank suggested interest rates in
the eurozone may rise in the near future.

The German central bank said the European Central Bank’s forward
guidance on low rates was “not an unconditional commitment” and
that it would depend on the medium-term inflation outlook.

“Forward guidance doesn’t rule out an increase in the benchmark
rate if greater inflation pressure emerges,” the Bundesbank
statement said.

But the euro was down against the pound, with the EUR/GBP exchange rate sliding to 0.8522, the
pair’s lowest in over a month.