Dollar drops before Fed minutes

The US dollar fell on Wednesday (August 19th) ahead of the release of minutes from the most recent Federal Reserve policy meeting that may show when the central bank is looking to hike rates.

Expectations the Fed will raise US short-term rates has driven the greenback up 20 per cent against its major peers in the last year, but concerns about China’s economy and recent stock market routs have cast doubt on the exact timing of an increase.

EUR/USD gained as much as 0.4 per cent to climb off Tuesday’s one-week lows. The dollar was also lower against the Swiss franc and Japanese yen.

Wednesday’s release of the minutes from the July meeting is one of the last big events before the Fed’s key September meeting, when many forecast it will pull the trigger on rates.

Sterling remained supported against the buck, with GBP/USD close to its strongest in almost seven weeks on expectations the Bank of England is preparing to hike rates this year.

Speaking to the BBC, Bank of England policymaker professor David Miles said interest rates will rise “pretty soon”. Earlier this month, the Bank’s Monetary Policy Committee voted 8-1 to keep rates at 0.5 per cent.

Meanwhile, oil remained anchored near a six-year low ahead of weekly information on US crude stockpiles.

West Texas Intermediate for October delivery shed half a per cent to trade below $43 a barrel. In London, Brent crude was flat at just above the $48 handle.

The weak commodity environment hit Glencore, which reported a 56 per cent drop in profits as prices have slipped to their lowest since the 2008/9 financial crisis.

Its share price plunged by as much as nine per cent in London, before paring losses to trade seven per cent lower, dragging the FTSE 100 down one per cent to 6,465.

The DAX in Frankfurt dropped by more than one per cent as lawmakers in Berlin voted on the bailout for Greece.