Dollar on defensive

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TOKYO: The U.S.dollar was on the defensive on Thursday after the minutes from the Federal Reserve´s last policy meeting showed policymakers  were increasingly wary of recent softness in inflation and could delay a rate hike.

The readout of the July 25-26 meeting showed some members called for halting interest rate hikes until it was clear the inflation trend was transitory, but it also indicated the Fed was poised to begin reducing its $4.2 trillion portfolio of bonds.

The dollar also stepped back to 109.84 yen, down 0.3 percent from late U.S. trade and down more than a full yen from Wednesday´s high of 110.95.The dollar´s index against a basket of six major currencies slipped to 93.39 from Wednesday´s three-week high of 94.145."There´s no change in market expectations that the Fed will announce the start of balance sheet reduction in September.

But markets think there´s risk to the scenario of a rate hike in December," said Shunsuke Yamada, chief Japan FX strategist at Bank of America Merrill Lynch.

Money market futures are pricing in about a 40 percent chance the Fed will raise rates by December, compared to just under 50 percent before the Fed´s minutes. —Reuters