Dollar pares gains in New York on continued Covid-19 vaccine optimism

The greenback pared intra-day gains made in Asia and European morning and ended lower against majority of its peers on Wednesday after market showed muted movement following release of FOMC minutes due to continued optimism that coronavirus vaccine will be available soon and hopes of a smooth transition to a Joe Biden presidency as well as fall in U.S. Treasury yields.  
  
Reuters said that U.S. Federal Reserve policymakers discussed how the central bank's asset purchases could be adjusted to provide more support to markets and the economy during the November policy setting meeting.     U.S. central bankers agreed the asset purchases were providing accommodation to the economy after market conditions stabilized, according to the minutes of the Nov. 4-5 meeting released on Wednesday. Some participants in the Federal Open Market Committee said they expected the Fed to eventually lengthen the maturity of the bonds purchased, according to the deliberations.     
Several policymakers also noted that there are limits to how much support the Fed could provide through purchases and expressed concern about unintended consequences, the minutes showed.      Fed officials voted to keep rates steady at the November meeting and repeated their pledge to do whatever possible to support the U.S. economic recovery.   
  
Reuters also reported new orders for U.S. non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, rose 0.7% last month. These so-called core capital goods orders surged 1.9% in September.    The economy grew at a 33.1% rate in the July-September quarter after contracting at a 31.4% pace in the second quarter, the deepest since the government started keeping records in 1947. Growth estimates for the fourth quarter are below a 5% rate.     Also, U.S. initial claims for state unemployment benefits totaled a seasonally adjusted 778,000 for the week ended Nov. 21, compared to 748,000 in the prior week, the Labor Department said on Wednesday. Economists polled by Reuters had forecast 730,000 applications in the latest week.  
  
Versus the Japanese yen, dollar traded inside a narrow range as focus remained on other majors. Price edged up to 104.59 in Asia before retreating to 104.27 in New York and then rebounded to 104.47 near the close.  
  
The single currency traded with a firm bias in Asia and gained to 1.1909 before weakening to 1.1892 ahead of European open. The pair then briefly rose to session highs at 1.1929 in early European morning before retreating to 1.1883 ahead of New York open. However, price then staged a strong rebound to 1.1926 in New York morning on usd's weakness and then moved sideways.  
  
The British pound traded sideways in Asia before retreating to 1.3338 ahead of European open. Price then jumped to 1.3385 in early European morning before falling to an intra-day low at 1.3305 in Europe on Brexit news and cross-selling of sterling especially vs euro. However, cable then erased intra-day losses and rallied to an intra-day high at 1.3394 (Reuters) in New York morning due partly to British Finance Minister Rishi Sunak's spending plan as well as usd's weakness and then moved broadly sideways.  
  
Reuters reported the head of the European Union's executive on Wednesday reported "genuine progress" in Brexit talks but said the risk of Britain leaving the EU without a new trade deal on Dec. 31 remained, an outcome she said the bloc was prepared for.    
Britain and the EU are in a last-ditch effort to agree terms to keep trade flowing without tariffs or quotas from the start of 2021, after London's current standstill transition out of the 27-nation bloc ends.  
  
In other news, Reuters reported Britain will borrow almost 400 billion pounds in the current financial year to pay for the massive coronavirus hit to its economy, finance minister Rishi Sunak said on Wednesday, taking the budget deficit to its highest since World War Two.       The world's sixth-biggest economy is set to shrink by 11.3% in 2020, its biggest contraction since the early 1700s, before growing by 5.5% in 2021, Sunak said as he announced a one-year spending plan.  
  
Data to be released on Thursday:  
  
New Zealand imports, exports, trade balance, Australia capital expenditure, building capex, Japan leading economic index, coincident index, Germany consumer sentiment, Swiss non-farm payrolls, France consumer confidence, Italy trade balance and U.S. market holiday.