LONDON, Nov. 25 (Reuters) – The dollar slipped overnight but was still close to its highest level since July 2020 against the euro on Thursday after the US Federal Reserve compiled the minutes that bolstered market expectations that the Fed will hike rates sooner than other major central banks.

The dollar has strengthened so far this month, with currency markets boosted by investors favoring the currencies of countries with more hawkish central banks.

Minutes from the November 2-3 meeting indicated that the Fed had become more concerned about rising inflation, with various policymakers saying they would be willing to accelerate the reduction in their bond buying program. if high inflation persisted and to increase interest rates faster. . Read more

Data released on Wednesday showed jobless claims in the United States were at their lowest in 52 years, consumer spending rose more than expected in October, and inflation rose. Read more

The dollar index hit a 16-month high on Wednesday night but eased overnight and was down 0.2% on the day to 96.664 08:38 GMT Thursday. It has gained around 2.7% so far this month.

Against the Japanese yen, the dollar was near a five-year high.

“USD dominates trading on the G10 FX,” wrote ANZ strategists John Bromhead and Daniel Been in a note to clients.

“With the Thanksgiving holiday now upon us, we believe a period of tactical consolidation may be near.”

The euro was up 0.2% against the dollar at $ 1.12215, a slight rally. But the euro lost another around 2.9% this month, weighed down by expectations that the European Central Bank would be more accommodating than the Fed, as well as, more recently, a new wave of COVID-19 restrictions in Europe. .

“Since this particular trade-weighted dollar measure is heavily skewed against European currencies, the combination of a bullish Fed and fourth waves in Europe makes the DXY (dollar index) look very long,” said writes ING’s currency strategists in a note. to clients.

An increase in coronavirus infections in Germany and unusually high inflation rates are weighing on consumer morale in Europe’s largest economy, an investigation found on Thursday.

Sweden’s central bank has left its monetary policy unchanged, arguing that inflation will slow down next year. It posted its first post-pandemic rate hike for the end of 2024. read more

The Swedish krona strengthened slightly and appreciated by around 0.5% to 9.0655 against the dollar and around 0.4% to 10.1780 against the euro. But it was still set for its worst month against the euro since March 2020.

The Australian dollar – considered a liquid indicator of risk appetite – held steady at $ 0.7187.

The New Zealand dollar lost 0.1% to $ 0.6866, languishing near the three-month low of $ 0.6856 reached the day before, when the country’s Reserve Bank raised the policy rate by a quarter percentage point, disappointing the bulls hoping for a half point increase. . Read more

In cryptocurrencies, bitcoin rose around 0.9% to $ 57,721.48, after recovering slightly from the month’s low of $ 55,128.60 it hit on Tuesday.

Reporting by Elizabeth Howcroft; Editing by Angus MacSwan

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