Most US Fed officials say rate hike likely needed soon

Fed's Dovish Tone Unravels Dollar

The euro was hampered by concerns over economic slowdown in the currency bloc and political risks in Italy, staying near a six-month low against the dollar and a nine-month low versus the yen.

The dollar index, which measures the greenback against a basket of six other currencies, hit a high of 94.188 before the release of the minutes, but pared some gains to trade up 0.42 percent at 94.006.

Minutes of the meeting show policy makers suggesting the central bank would "likely soon" take another step in raising raises if the economy continues on its glide path. Economists expect the Fed to nudge rates higher in June.

And the minutes said there were "a range of views" among FOMC participants about how many more times the Fed would have to raise interest rates.

"Part of what's driving that is the market was bracing for the meeting minutes to be a bit more hawkish than they are".

USA crude was flat at $71.83 a barrel. "Consensus finds no major signs of accelerating inflation; wage improvements aren't broad; drivers of the (workforce) participation rate are still a mystery and the flatter yield curve isn't flashing red yet", Citi analysts said in a note.

The Trump administration has imposed tariffs on steel and aluminum imports and has also threatened to impose tariffs on up to $150 billion in Chinese products. The greenback also slid 0.60 percent against the yen to 109.41, after falling 0.73 percent against the yen on Wednesday, its steepest decline in almost three months. Only the Hang Seng Index was in the green, gaining 0.02 percent.

The safe-haven Swiss franc also ticked up 0.2 percent to 0.9943 franc to the dollar, helped by investors' cautious mood.

The yield on benchmark 10-year Treasury notes US10YT=RR fell back below the 3-percent threshold to 2.999 percent, compared with its US close of 3.003 percent on Wednesday.

IHS Markit's Euro Zone Composite Flash Purchasing Managers' Index (PMI), considered a good guide to the euro zone's economic health, sank in May to an 18-month low, suggesting the continent's strong growth a year ago has lost steam.

Worries about an incoming coalition Italian government comprised of the two anti-establishment parties and concerns about Turkey heading for an economic crisis kept the euro on the defensive.

The common currency was soft against the yen, hitting a nine-month low of 128.24 yen on Wednesday. "In short, then, the FOMC still thinks it has the luxury of time to see the full impact of the fiscal easing and the uncertainty over foreign trade, so a shift to a more aggressive stance - dropping "roughly balanced" risks, for example - is still some way off". Earlier this year, people thought the European Central Bank, the Bank of England and the Federal Reserve will all raise interest rates. "But now the ECB has clearly dropped out", said Kazushige Kaida, head of forex at State Street Bank and Trust in Tokyo.

The British pound licked its wounds at $1.3374, after hitting a five-month low of $1.3305 following weak United Kingdom inflation data.

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