The dollar surrendered some recent gains on Thursday as central bankers gathered for a three-day meeting in Wyoming that will feature a potentially market-rattling speech by Federal Reserve Chair Janet Yellen. The dollar had climbed steadily this week against other major currencies, riding rising US Treasury yields in contrast to declining euro rates. But the US dollar index of six currency combinations was down 0.09 percent in late New York trading after touching an 11-month peak of 82.364 during overnight dealings.
"There has been a pretty strong dollar rally and today there is profit-taking on dollar positions," said Kathy Lien, managing director at BK Asset Management. "There is fear she is going to sound less dovish than the FOMC minutes." The minutes of the latest meeting of the Fed's policy-setting Federal Open Market Committee, released on Wednesday, revealed an unexpectedly active debate among members over whether increases in US interest rates may be needed sooner than generally forecast.
The dollar was little affected on Thursday by US data showing a greater-than-expected drop in new claims for unemployment benefits and a stronger-than-anticipated rise in America's leading economic indicators for July. "On the US data alone, the dollar should be extending its gains," Lien said. The euro recovered from an 11-month low against the dollar after better-than-expected German private sector growth data. The euro, which traded in early May a hair under $1.40, was last up 0.15 percent to $1.3258.
"Stronger short-term gains for the buck are seen hinging on remarks Friday from Fed Chair Janet Yellen on the job market," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington. "Words that strike a more dovish than hawkish tone would leave the dollar vulnerable to a pullback." Among the biggest movers in the European session was the Norwegian crown, which hit a two-month high against the euro after forecast-busting growth data. Norway's economy grew 1.2 percent in the second quarter, double expectations, and piling pressure on the central bank to bring forward a rate hike.
The crown also rose sharply against the dollar despite the greenback's being the most sought-after of the actively traded currencies in the past few sessions. The dollar last traded at 6.151 crowns, off 0.75 percent. In the euro zone, Germany's private sector grew for a 16th month running in August, suggesting Europe's largest economy could expand robustly in the third quarter after it surprisingly contracted in the second. Data from France, however, showed business activity was stagnant in August, although service sector growth picked up.