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Traders said the probability of a September hike is now around
40 percent, down from about 50 percent towards the end of July,
a factor that is likely to weigh on the dollar in the near term.
With volumes drying up over the summer holiday period, traders
said currency moves were likely to be exaggerated.
The dollar index <.DXY> was down 0.2 percent at 96.195, with the
euro rising 0.5 percent to trade at $1.1178 <EUR=>. The dollar
was also down 0.3 percent against the Swiss franc at 0.96255
francs <CHF=>, although it was marginally higher against the yen
<JPY=>.
"The ongoing (Fed) rhetoric of data-dependence and a reluctance
to commit is becoming tiresome to the market," said Alex Lydall,
senior sales trader at Foenix Partners, a firm which offers
currency hedging solutions to companies.
"Bearing in mind these minutes were released from the July
meeting, further risk events have occurred since, in China
especially, with oil prices also continuing to tumble,
questioning whether or not the Fed could likely be more dovish."
The minutes showed that while Fed officials agreed last month
the economy was nearing a point where rates should move higher,
some were worried lagging inflation and a weak global economy
posed risks too big to commit to a liftoff.
Meanwhile, in the European session, the Norwegian crown fell to
its lowest in over seven months against the euro after Norway's
economy slowed in the second quarter, leaving the door open for
more monetary easing in coming months.
The crown has fallen 10 percent in the past three months against
the euro as prices of crude oil, Norway's main export, fell,
dampening overall investment and pushing up unemployment.
The euro rose 0.4 percent to 9.2734 crowns, its highest since
early January, while Norway's import weighted currency index
fell 0.1 percent.
"The data, while in line with expectations, is not good with the
revisions to the first quarter catching the market's attention,"
said Richard Falkenhall, currency strategist at SEB. "This
boosts expectations that the Norges Bank will lower rates next
month and the euro can rise up to 9.50 crowns."
Norway's overall economy shrank in the second quarter, with the
mainland growing at a measly 0.2 percent.
(Editing by Ruth Pitchford)
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