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Dollar slides lower as U.S. rate hike expectations subside

Published 10/09/2014, 04:55 AM
Dollar weakens broadly vs. rivals on Fed minutes
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Investing.com - The dollar slid lower against a basket of other major currencies on Thursday, as the minutes of the Federal Reserve's latest policy meeting dampened expectations for an early rate hike.

The US Dollar Index, which tracks the performance of the greenback against a basket of six major currencies, fell 0.30% to 85.11, pulling away from a four-year peak of 86.87 hit last Friday.

The dollar wekened after the minutes of the Fed's September 16-17 policy on Wednesday showed that a number of officials believe the bank's current language painted the wrong picture on the timing of rate hikes and that an interest rate rise should be tied to U.S. economic progress.

The report also showed that the U.S. central bank cut its growth outlook due to the higher dollar and concerns over global weakness.

USD/JPY remained near three week lows of 107.61 hit overnight, before pulling back slightly to trade a 107.79, down 0.23% for the day.

Government data earlier showed that Japan's core machinery orders rose 4.7% in August, more than the expected 1.1% increase, after a 3.5% gain in July.

The dollar had rallied against the euro and the yen in recent months amid growing expectations that the Fed is growing closer to raising interest rates, while central banks in Japan and Europe are likely to stick to a looser monetary policy stance.

The Bank of Japan left monetary policy unchanged at its policy meeting on Tuesday, but acknowledged that declining domestic demand as a result of a sales tax increase in April was leading to economic weakness.

EUR/USD rose to more than two-week highs of 1.2791 and was last up 0.23% to trade at 1.2765.

The pound and the Swiss franc also gained ground, with GBP/USD adding 0.23% to trade at 1.6203 and USD/CHF slid 0.37% to 0.9482.

The Bank of England was set to leave its benchmark interest rate unchanged, as well as the level of the bank's asset purchase facility program later Thursday.

The commodity linked dollars were broadly stronger, with AUD/USD up 0.41% to 0.8878, NZD/USD gaining 0.67% to trade at 0.7958 and USD/CAD slipping 0.17% to 1.1091.

Earlier in the day, official data showed that the number of employed people in Australia fell by 29,700 last month, confounding expectations for a 17,600 increase.

The report also showed that Australia's unemployment rate ticked up to 6.1% in September from 6.0% in August, whose figure was revised from a previously estimated rate of 6.1%.

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