LONDON The minutes from the November meeting of the Federal Reserve supported the view that the central bank would downshift and raise rates in smaller steps from its December meeting, which resulted in the U.S. dollar holding onto losses on Thursday.
The eagerly anticipated readout of the Nov. 1 -- 2 meeting showed officials were largely satisfied that they could move in smaller steps, with a 50 basis point rate likely to rise next month after four consecutive 75 basis point increases.
Niels Christensen, chief analyst at Nordea, said that the Fed will still feel it needs to do more to bring inflation down and that they will be happy to move rates by 50 basis points in December and 25 basis points from the first meeting next year.
As long as the Fed see a stronger labour market, they don't have a big concern about tightening, Christensen said.
The dollar index, which measures the dollar against six major peers, was little changed at 105.93 after sliding 1.1 per cent on Wednesday.
The Fed has taken interest rates to levels that have not been seen since 2008, but slightly cooler than expected U.S. consumer price data has spurred expectations of a moderate hike.
In November, the dollar index fell 5.1 per cent, putting it on track for its worst month in 12 years.
There are not many dollar buyers around these days after the correction in the euro-dollar in the first half of November, according to Christensen, Nordea's president.
The accounts of the European Central Bank's November meeting were the focus of the focus in Europe at 1230 GMT.
The euro was up 0.2 per cent at $1.0415, while the sterling was last trading at $1.2086, up 0.3 per cent on the day. The pound rallied 1.4 per cent on Wednesday after preliminary British economic activity data beat expectations, although it still showed that a contraction was under way.
The euro was up 0.3 per cent against the Swedish krone after Sweden's Riksbank raised rates by 75 basis points, in line with expectations in a Reuters poll.
In China, rising coronaviruses have led cities nationwide to impose more curbs, increasing investor concerns about the economy and putting a lid on risk appetite. On Thursday, China reported a record number of infections.
The yuan CNY fell after Chinese state media quoted the cabinet as saying that Beijing will use timely cuts in banks' reserve requirement ratio RRR alongside other monetary policy tools to keep liquidity reasonably ample.
The Japanese yen was one of the strongest gainers against the dollar, climbing 0.6 per cent to 138.77.
The Australian dollar went up 0.2 per cent to $0.6747, while the kiwi was 0.1 per cent higher at $0.6249.
The U.S. markets will be closed Thursday for Thanksgiving, and there will be less liquidity than usual.