Investing.com – The US dollar gave up some of the previous session's gains on Thursday, but remained near a one-week high after minutes from the Federal Reserve's latest meeting indicated US interest rates will remain high for some time.
At 04:20 ET (08:20 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, was down 0.1% at 104.705, after rising 0.3% overnight.
The dollar rose thanks to hawkish Fed meeting minutes
A Fed meeting in late April showed that policymakers were growing concerned about persistent inflation, with some Fed officials talking about the possibility of raising interest rates further to reduce inflation.
“While the general view was that the policy was well-placed, many members were open to further increases if necessary. Incidentally, 'several' participants questioned whether the policy was sufficiently restrictive,” ING said in a note. .
Several Fed officials later warned about inflation levels in speeches following the meeting.
But the Fed is still unlikely to raise rates further, so markets now expect a greater chance of the central bank keeping rates high for longer.
The Atlanta Fed President is scheduled to speak later in the session, and traders will look to his comments as well as May data for further evidence.
Sterling maintains firm tone after election news
In Europe, it rose 0.1% to 1.2730, with the pound maintaining its strong tone after Wednesday's data showed that UK inflation fell less than expected in April.
Prime Minister Rishi Sunak called a general election, which his Conservative party is widely expected to lose to the opposition Labor Party after 14 years in power.
ING said: “The pound also appears to have been very little affected by the news and, more importantly, by many of the volatile events that have been associated with UK policy in previous years (UK-EU trade relations, unfunded budget) Spending, the Scottish referendum) all look fairly marginal risks now.
Trading rose 0.2% to 1.0839, after data showed that business activity in the euro zone expanded at its fastest pace in a year this month.
The preliminary HCOB index rose to 52.3 this month from 51.7 in April, beating expectations for a more modest rise to 52.0, supported by buoyant demand for services, while the manufacturing sector showed signs of approaching recovery.
The European Central Bank has largely confirmed that it will begin its interest rate cutting cycle next month, and the current discussion is about how many, if any, additional cuts policymakers will agree to this year.
The yen stabilized despite an improvement in the PMI
In Asia, the index was largely stable at 156.76, after rising to nearly 157 in evening trading, with data for Japan showing manufacturing activity expanded for the first time in 11 months.
It traded 0.1% higher at 7.2443, trading just below its highest level in six months.
Beijing has been seen banning some US companies from participating in China-related business activity, while also banning some arms shipments to Taiwan. The move was seen as a retaliation for strict US tariffs on key Chinese industries, which will be effective from August 1.
China also conducted military exercises near Taiwanese territory, raising concerns about rising tensions in the region.