October 11, 2017 / 1:07 AM / in 7 days

Dollar index hits 2-week low ahead of FOMC minutes

FILE PHOTO: A picture illustration of U.S. dollar, Swiss franc, British pound and Euro bank notes January 26, 2011. REUTERS/Kacper Pempel/Illustration/File Photo

NEW YORK (Reuters) - The dollar fell on Wednesday to a two-week low against a basket of currencies, ahead of the U.S. Federal Reserve’s release of the minutes on its September policy meeting where policy-makers decided to pare the central bank’s $4.5 trillion balance sheet.

While the Fed revealed plans to reduce its vast holdings of Treasuries and mortgage-backed securities, the minutes may provide clues on whether a U.S. interest rate hike is planned for December, analysts said.

The Fed will release minutes of its Sept. 19-20 meeting at 2 p.m. EDT (1800 GMT).

The dollar has weakened from a 10-week high since Friday, when the September payrolls report showed employers cut jobs.

“After last Friday’s disappointing payrolls number, people has been taking profit” on U.S. dollar positions, said Lennon Sweeting, chief market strategist at XE.com Inc. in Toronto.

Investors were also concerned U.S. President Donald Trump could hurt his tax reform plan by feuding with Senator Bob Corker, a fellow Republican whose vote Trump will probably need.

The dollar index .DXY, which measures the greenback against six currencies, shed 0.2 percent to 93.104 after hitting 92.961, its lowest since Sept. 26.

The greenback was particularly weaker versus the euro as Spanish stocks and bonds surged after Catalonia stopped short of formally declaring independence from the rest of Spain.

The single currency was also supported by expectations that the European Central Bank would announce at its policy meeting later this month that it is winding back its 2.3 trillion euro bond-buying program.

Any more advances by the euro should be limited since it has already appreciated more than 12 percent against the dollar this year, analysts said.

The euro reached a 2-week peak at $1.1858 EUR=. It was last at $1.1841, up 0.3 percent from Tuesday.

Additional reporting by Jemima Kelly, Saikat Chatterjee in London; Shinichi Saoshiro in Tokyo; Editing by David Gregorio

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