The US dollar edged higher against major currencies on Thursday after traders discounted Wednesday's cautious minutes from the latest Federal Reserve policy meeting, while optimism for a Greece debt deal limited the euro's losses. The dollar rebounded against the yen and hit a more than one-month high against the Swiss franc after traders reverted to the view that the Fed could hike interest rates by June despite the minutes showing officials were concerned that raising rates too soon could damage the US economic recovery.
Analysts said the minutes were somewhat dated since they reflected the Fed's thinking before the release of a stronger-than-expected US payrolls report for January. "The 2015 rate hike very much remains on the table," said Kathy Lien, managing director at BK Asset Management in New York. "Yesterday's pullback in the dollar simply attracted bargain-hunters."
The euro weakened after Germany rejected Greece's request for a six-month extension to its euro zone loan agreement as it races to avoid running out of money within weeks. Persistent optimism that Greece will reach a deal with its international lenders, however, kept the euro from losing too much ground. "A deal is very much likely," said David Gilmore, partner at Foreign Exchange Analytics in Essex, Connecticut. "No one wants to see a Greek exit."
With its program due to expire in little more than a week, Athens urgently needs to secure a financial lifeline to keep the country afloat beyond late March. Euro zone finance ministers will meet on Friday afternoon in Brussels to consider the request. The euro was last down 0.29 percent against the dollar at $1.13645. The dollar was last up 0.16 percent against the yen at 118.975 yen. The dollar was up 0.78 percent against the Swiss franc at 0.94975 franc. The dollar hit 0.94990 franc, its highest since the Swiss National Bank scrapped a 1.20 francs per euro cap on January 15.
Analysts have speculated that the SNB has intervened to weaken the franc since the cap was removed, with some on Thursday saying the central bank could be buying the greenback. "The new tactic of the SNB is to intervene quietly," Lien said. The dollar index, which measures the greenback against a basket of six major currencies, was last up 0.25 percent at 94.436. On Wall Street, the benchmark S&P 500 stock index was nearly flat.
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