The dollar fell to one-week lows against the euro and yen on Thursday as investors grew cautious about the impending release of minutes of last month's US Federal Reserve meeting, which could shed more light on the central bank's somber outlook on growth and interest rates. At the meeting, the Fed held interest rates as expected but struck a surprisingly dovish tone about US and global growth prospects.
"While financial market volatility has eased somewhat since the Fed's last meeting, many doubts about the health of China and emerging economies remain, which is likely to dampen the prospects of a Fed rate hike this year and likely keep the dollar's gains limited," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington. Fed fund futures show a 38 percent chance of an end to the near-zero interest rate policy in December and a 50 percent chance in January, according to CME Group's FedWatch program.
In mid-morning trading, the euro was up 0.4 percent at $1.1274 after hitting a one-week high of $1.1315. The dollar also fell against the Swiss franc, down 0.6 percent at 0.9696 franc. Against the yen, the dollar was down 0.1 percent at 119.85 yen. Earlier it hit a one-week trough of 119.60 yen. The yen, traditionally a safe haven for investors in times of economic stress, has benefited from the volatile mood on stock markets since August amid broader concerns over the pace of global growth. The greenback edged up a little bit after data showed US weekly jobless claims fell in the latest week to a nearly 42-year low, suggesting an improving labor market. Sterling was down 0.1 percent at $1.5291.
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