U.S. Dollar Falls As Fed Minutes Show Concerns Over Inflation

The U.S. dollar dropped against its key counterparts in the Asian session on Thursday, after the minutes from the Federal Reserve's latest meeting showed that Fed officials were concerned over inflation, with several of them worried about another rate hike later this year.

The minutes from the Federal Reserve's September 19-20 meeting showed a detailed debate over whether stubbornly low inflation was transitory or permanent.

Several Fed officials said their decision to move forward with another rate hike this year would be dependent on more inflation data in the next few months.

"Many participants expressed concern that the low inflation readings this year might reflect not only transitory factors, but also influence the developments that could prove more persistent," it showed.

Investors await U.S. consumer inflation data for September on Friday for more insights about monetary policy.

The greenback dropped to an 8-day low of 0.9712 against the franc and more than a 2-week low of 1.1880 against the euro, from Wednesday's closing values of 0.9732 and 1.1858, respectively. The next possible support for the greenback is seen around 0.96 against the franc and 1.20 against the euro.

The greenback reversed from an early high of 112.52 against the yen, edging down to 112.24. If the greenback falls further, 111.00 is possibly seen as its next support level.

The greenback slid to an 8-day low of 1.3265 against the pound early in the Asian session and held steady thereafter. The pair finished Wednesday's trading at 1.3223.

The greenback weakened to near a 2-week low of 1.2433 versus the loonie, weekly lows of 0.7119 against the kiwi and 0.7833 against the aussie, compared to yesterday's closing values of 1.2453, 0.7081 and 0.7788, respectively. The greenback is seen finding support around 1.23 against the loonie, 0.72 against the kiwi and 0.79 against the aussie.

Looking ahead, Eurozone industrial production for August is due in the European session.

In the New York session, U.S. producer prices for September and weekly jobless claims for the week ended October 7 as well as Canada new housing price index for August are set for release.

At 10:30 am ET, the European Central Bank President Mario Draghi and Federal Reserve Governor Lael Brainard participate in a panel discussion about monetary policy at the Peterson Institute for International Economics, in Washington DC.

Simultaneously, Federal Reserve Governor Jerome Powell will give a speech titled "Prospects for Emerging Market Economies in a Normalizing Global Economy" at the Institute of International Finance Annual Membership Meeting, in Washington DC.