Investing.com - The U.S. dollar was lower against a basket of the other major currencies on Thursday after Federal Reserve minutes that pointed to uncertainty over the potential impact of the incoming Trump administration’s policies on the economy.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.39% at 102.09.
The index hit 14-year peaks on Tuesday as strong U.S. factory data fed into expectations for a faster pace of monetary tightening in 2017.
But the greenback came under pressure after Wednesday’s minutes from the Fed’s December 13-14 meeting showed that officials noted “considerable uncertainty" over the policy direction of President-elect Donald Trump’s incoming administration.
Trump will take office on January 20 and has yet to outline his economic policies in detail.
The minutes also showed the recent appreciation in the dollar could lead to a slower pace of rate hikes.
The Fed noted that “a further strengthening in the dollar could lead to tighter financial conditions that restrain economic activity and inflation—a key downside risk.”
U.S. data on Thursday showed that initial jobless claims fell by 27,500 to 235,000, an almost 43 year low.
Another report showed that the U.S. private sector added 153,000 jobs in December, below expectations for a gain of 170,000.
Analysts were looking ahead to Friday’s U.S. nonfarm payrolls report for December for indications on solid growth in the labor market which could enable the Fed to keep pushing up interest rates.
Higher rates typically boost the dollar by making dollar assets more attractive to yield-seeking investors.
Gains in China’s yuan pressured the dollar lower as Beijing acted to shore up the currency ahead of President-elect Trump’s inauguration.
The euro moved higher, with EUR/USD rising 0.44% to 1.0533, extending its recovery from the 14-year trough of 1.0339 set on Monday.
The dollar was sharply lower against the yen, with USD/JPY falling 1% to 116.06.
Sterling was little changed, with GBP/USD at 1.2325 concerns over Brexit continued to weigh.
The pound found some support after data showing that growth in the dominant U.K. service sector accelerated for a third straight month to a 17-month high in December.
Elsewhere, the Australian dollar touched two-week highs after data showing that activity in China’s services sector rose to a 17-month high last month, with AUD/USD up 0.38% at 0.7309.