Members of the Fed’s rate-setting Federal Open Market Committee were generally upbeat about the U.S. economy and labour market, but several said any slowdown in future hiring would argue against a near-term hike.
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The euro was last up 0.56 percent against the dollar at $1.1350.
“They did indicate a better economy, and clearly the Fed is slowly moving towards another rate hike”, said Ethan Harris, head of global economics research at Bank of America Merrill Lynch, in an interview on Bloomberg Television.
New York Fed President William Dudley on Thursday was upbeat about the outlook for jobs and growth, adding color to his view that the time for another interest-rate increase “is edging closer”.
Members of the US Federal Open Market Committee (FOMC) were split on whether to raise interest rates at its July monetary policy meeting.
The Fed also has policy meetings scheduled in early November and mid-December. “The two-year yield is likely to be driven by Fed expectations, and those look increasingly dovish”. Their remarks helped push the odds of a rate hike at the December 2016 meeting up to 50.3% before the minutes were released, according to pricing on Fed funds futures from the CME’s Fed Watch tool.
“They saw little evidence that inflation was responding much to higher levels of resource utilization and suggested that the natural rate of unemployment, and the responsiveness of inflation to labor market conditions, may be lower than most current estimates”.
The US dollar was flat against a basket of major currencies after gyrating in both directions following the minutes.
The dollar was down 0.5 per cent at 99.79 yen, nearing a post-Brexit low of 99.55 hit on Tuesday.
The lower the interest rate, the more willing people are to borrow money to make big purchases such as houses and cars, and this subsequently can create a ripple effect of more spending throughout the economy.
“Participants viewed the near-term risks to the USA economic outlook as having diminished”, the minutes said.
USA gold climbed 0.6 percent to $1,356.70 an ounce. Jobs data for July were strong – payrolls rose 255,000 – but retail sales and inflation indicators for the month were soft, leaving open the possibility of a prolonged Fed divide that could further delay the next rate move.
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The US currency declined 0.6 per cent to US$1.1354 per euro and dropped 0.4 per cent to 99.89 yen.
