The dollar fell on Wednesday to a two-week low against a basket of currencies, as the U.S. Federal Reserve's latest minutes hinted policy-makers are open to an interest rate increase in December despite concerns about weak inflation.
Several Fed officials expressed they would like more inflation data in the next few months when deciding on future rate hikes. That view within the Fed raised some doubts among traders that a third rate increase in 2017 would be a sure thing, though it has largely been priced into the futures market.
"Any comments on concerns about inflation outlook signals a bit a dovish mindset," said Minh Trang, senior currency trader at Silicon Valley Bank in Santa Clara, California.
Futures markets suggested traders saw an 88 percent chance the Fed would raise rates in December, little changed prior to the release of the latest Fed minutes, CME Group's FedWatch program showed.
The Fed minutes pressured the dollar, which has weakened from a 10-week high since Friday, when the September payrolls report showed employers cut jobs.
"After last Friday's disappointing payrolls number, people has been taking profit" on U.S. dollar positions, said Lennon Sweeting, chief market strategist at XE in Toronto.
Investors were also concerned U.S. President Donald Trump could hurt his tax reform plan by feuding with Senator Bob Corker, a fellow Republican whose vote Trump will probably need.
The dollar index, which measures the greenback against six currencies, lost 0.38 percent to 92.94 after hitting its lowest since Sept. 26. The greenback was particularly weak versus the euro as Spanish stocks and bonds surged after Catalonia stopped short of formally declaring independence from the rest of Spain.
The single currency was also supported by expectations that the European Central Bank would announce at its policy meeting later this month that it would wind back its 2.3 trillion euro bond-buying program. Any more advances by the euro should be limited since it has already appreciated more than 12 percent against the dollar this year, analysts said.
The euro reached a two-week peak at $1.1864. It was last at $1.863, up 0.48 percent from Tuesday.