By Peter Nurse
Investing.com — The dollar edged lower in early European trade Wednesday ahead of the release of the keenly-awaited minutes from the last Federal Reserve meeting, with traders looking for clues on the direction of the economy and interest rates.
At 4:04 AM ET (0804 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, traded 0.1% lower at 92.483.
The dollar received a boost Tuesday as volatility surrounding the price of oil, the Chinese clampdown on the tech sector and a weak ISM non-manufacturing reading prompted a bout of risk aversion.
However, the greenback has since given back some of those gains ahead of the release of the minutes from the Fed’s June 2021 meeting, at 2:00 PM ET (1800 GMT), which are widely expected to offer clues to the central’s bank’s policy outlook moving forward.
“Concerns about a slower recovery after the grim non-manufacturing ISM reading yesterday are inherently tied to Fed’s rate expectations, and some investors may start to feel the danger of a Fed that will have to go ahead with its tightening cycle in 2023 even if the economy is in a more vulnerable state than currently expected,” said analysts at ING, in a note.
” The FOMC June minutes are therefore set to be watched closely today, with markets weighing carefully the rationale behind the hawkish shift by policymakers.”
Additionally, the May release of job openings and labor turnover, at 10 AM ET, is expected to show 9.4 million vacancies for May, a small increase on the number of vacancies in April.
Dollar Slips Back Ahead of Key Fed Minutes Release
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