The dollar traded around one-week lows against a basket of major currencies on Thursday, coming under pressure after minutes of the Federal Reserve’s June meeting gave no clear indication about the timing of any interest rate rise.
The Fed minutes confirmed that the U.S. central bank’s monthly bond purchases would probably end in October and showed that policymakers debated the complexities of unwinding a stimulus program that has flooded the financial system with over $2 trillion.
The uncertain outlook for the timing of the Fed’s move has kept major currencies in relatively tight ranges in recent weeks.
“The Fed is driving the station wagon right now, with everybody in the back. We’re expecting rates to go higher, and there are side bets on when that might happen,” said Bart Wakabayashi, head of Forex at State Street Global Markets in Tokyo.
“We’re all waiting for something to kick-start this, but I think we all know it’s the Fed,” he said.
The dollar index was flat in Asian trade at 79.998 after dropping to a one-week low of 79.976 early in the session.
Benefiting from renewed softness in the greenback, the euro was steady on the day at $1.3646 after rising to a one-week high of $1.3649 when the Fed minutes proved more dovish than expected.
“The market had likely positioned for a hawkish tone to the minutes, given the upward revisions to Fed rate forecasts, as well as the fact that these tend to reflect a broader set of FOMC members, both non-voters and voters, than the post-meeting statement,” analysts at Barclays wrote in a note to clients.
Against the yen, the dollar slipped about 0.1 percent to 101.54 yen, not far from a one-week low of 101.44 yen touched overnight.
Undermining the yen, data released early in the session showed Japanese machinery orders suffered their worst monthly fall on record in May, defying expectations of a bounce.
The euro edged down about 0.1 percent to 138.57 yen but remained above Wednesday’s low of 138.14 yen.
European Central Bank President Mario Draghi has reiterated the ECB is ready to use “unconventional instruments” if needed to boost growth, but he devoted most of a speech this week to press for closer European integration to deliver growth and jobs.
Sterling was steady at $1.7152, within easy reach of this month’s six-year high of $1.7180. The Canadian dollar edged up to C$1.0655 per USD, not far from last week’s six-month high of C$1.0620.