The U.S. dollar
hit its lowest level against the euro in nearly eight weeks and an
eight-week low against the Swiss franc 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. Those 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.
Dudley
on Thursday reinforced his message on the broader economy being on
track. While the dollar initially pared losses, it soon shrugged off the
remarks and extended losses in the afternoon trading session.
“(Dudley)
said his views haven’t changed, but at this point, I think the market
has sort of bought back into the dovish Fed story,” said Win Thin,
global head of emerging market currency strategy at Brown Brothers
Harriman in New York.
The euro EUR= hit a session high of $1.1356 and the dollar touched a session low against the franc of 0.9540 franc CHF=. The dollar also slipped to 99.66 yen earlier, a hair above Tuesday’s more than seven-week low of 99.53 yen JPY=.
The
dollar index, which measures the greenback against a basket of six
major currencies, was last down 0.58 percent at 94.170 .DXY after
touching a nearly eight-week low of 94.141.
Federal
funds futures on Thursday implied traders saw a 48.8 percent chance of a
Fed rate hike this year, according to data from CME Group’s FedWatch
program.
Analysts said the FOMC minutes have had the biggest impact on the dollar, compared with 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 last up 0.56 percent against the dollar at $1.1350. The dollar
was down 0.79 percent against the franc at 0.9538 franc CHF= and was down 0.29 percent against the yen at 99.95 yen.
