Dollar drifts lower as Fed minutes-fuelled bounce fades

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FILE PHOTO: A U.S. one dollar banknote is seen in front of displayed stock graph in this illustration taken May 7, 2021. REUTERS/Dado Ruvic/Illustration

By Saikat Chatterjee

LONDON (Reuters) – The U.S. dollar slipped on Thursday but remained well above three-month lows hit overnight after minutes from the Federal Reserve’s last policy meeting showed there was more talk of it tapering its bond purchases than investors had expected.

In the Fed minutes, several policymakers said a discussion about reducing the pace of asset purchases would be appropriate “at some point” if the U.S. economic recovery continues to gain momentum.

That surprised markets, with some investors unwinding some of their short dollar positions and pushing the dollar higher as they believed the Fed would remain on hold for the foreseeable future despite strong data.

However, the dollar’s gains fizzled…

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