Dollar whipsaws after Fed minutes released


The dollar index whipsawed Wednesday following the release of minutes from the Federal Reserve's June meeting.

The index, which measures the dollar versus a group of six major currencies, was nearly flat after rising 0.20 percent immediately following the release of minutes showing Fed officials worried about loose policy and ultimately determined to raised interest rates at its June meeting.

The Fed plans to unwind its $4.5 trillion balance sheet it accrued while trying to stimulate the economy during and after the financial crisis. It did not release a timetable for the process, though.

As for other currencies, the euro was up 0.03 percent to $1.1345, and sterling was up 0.10 percent at $1.2929 following the announcement.

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The yen rose briefly on safe-haven demand after North Korea said on Wednesday it conducted a test of a newly developed intercontinental ballistic missile (ICBM) that can carry a large nuclear warhead. A sharp pullback in oil prices bogged down the Canadian dollar and other currencies of countries whose economies are reliant on commodity exports.

"Traders are looking for more clarity on the Fed's strategy for the rest of the year," said Minh Trang, senior currency trader at Silicon Valley Bank in Santa Clara, California.

The hit a seven-week high against the yen at 113.68 yen before fading to 113.16 yen.

The dollar slipped below 113 yen in overnight trading in the wake of Pyongyang's announcement on its latest missile launch. U.S. financial markets were closed on Tuesday for the July Fourth holiday.

Why the dollar has been driven lower

As U.S. price growth has weakened and remained below the Fed's 2 percent inflation goal, some traders have piled on bets for the dollar to fall. Bearish bets on the greenback rose in late June as the European Central Bank and Bank of England hinted they might consider scaling back monetary stimulus later this year.

A 3 percent drop in oil prices hurt the Canadian , Australian, New Zealand dollars and other commodity-sensitive currencies. The Canadian dollar fell 0.5 percent at C$1.3002 per dollar after hitting C$1.2912 on Tuesday, which was its strongest against the greenback since Sept. 9.

CNBC's Jeff Cox contributed to this report.