×

Dollar at 7-week low as Fed minutes show little support for rate rise

Chung Sung-Jun - Getty Images

The U.S. dollar hovered near its lowest against the euro and Swiss franc in nearly eight weeks on Thursday, a day after minutes from the Federal Reserve's July meeting showed a bias among policymakers against raising interest rates soon.

The minutes showed members of the rate-setting Federal Open Market Committee were generally upbeat about the U.S. economic outlook. Several Fed policymakers, however, said a slowdown in the future pace of hiring would argue against a near-term hike, and FOMC members said they wanted to "leave their policy options open."

The minutes disappointed those expecting that the Fed could be turning more hawkish. The expectations had been bolstered by comments from New York Fed chief William Dudley on Tuesday, who said the central bank could possibly raise rates as soon as September.

The euro hit a near eight-week high against the dollar of $1.1338 in early trading, and the dollar touched a nearly eight-week low against the Swiss franc of 0.9570 franc . The dollar also slipped to 99.66 yen earlier, or a hair above Tuesday's more than seven-week low of 99.53 yen.

The dollar last hovered slightly above the multiweek lows.

The dollar index, which measures the greenback against a basket of six major currencies, was down 0.54 percent at 94.18. The index earlier touched a near eight-week low of 94.324.

"The market's take on the FOMC minutes is to read them in a somewhat more dovish fashion on the view that the Fed seems too divided to raise rates anytime soon," said Alan Ruskin, global head of FX strategy at Deutsche Bank in New York.

Federal funds futures on Thursday implied traders saw a 52.4 percent chance of a Fed rate hike this year, according to data from CME Group's FedWatch program.

The dollar briefly pared losses after comments from Dudley on Thursday reinforced the influential policymaker's positive message on the broader economy.

Analysts said the FOMC minutes have had the biggest impact on the dollar, however, compared to recent Fed policymakers' comments.

"When we did not receive the unambiguous hawkishness from the FOMC minutes, that kind of opened up the door to additional (dollar) selling," said Kathy Lien, managing director at BK Asset Management in New York.

The euro was up 0.49 percent against the dollar at $1.1353. The dollar was down 0.71 percent against the franc at 0.9546 franc. The dollar was up 0.04 percent against the yen at 99.88 yen.