[ForexNews]

The FOMC minutes, released overnight, pointed to an increasing division among its members as expected, but at the same time, doves appeared to outweigh the hawks, and US interest rates do not look like they are going higher anytime soon. In particular, while many FOMC officials supported expanding the central bank's MBS purchases, only one member favoured ending the programme early. This reinforces the view that the excess liquidity provided by the Fed is likely to be maintained for now, which adds to the downward pressure on the dollar.

In stark contrast, the interest rate outlook for the AUD and NZD continues to develop in a more hawkish manner. RBA Governor Stevens' speech overnight made it very clear that the RBA will be removing its emergency rate setting relatively quickly (ie, the cut in rates to 3.00% from 4.25%). Governor Stevens pointed to Australia's monetary policy transmission mechanism being more effective than other countries' mechanisms during the crisis and said this means the RBA cannot be too timid in raising rates, the same way it was not too timid in cutting rates during the crisis. Also, New Zealand's CPI data provided a large upside surprise. Inflation was 1.3% q/q and 1.7% y/y versus the RBNZ’s forecast for 0.9% q/q headline inflation, leading to a very sharp sell-off in the NZ front-end and NZD strength.