* Dollar index falls to three-week lows
* Fed minutes taken as dovish, U.S. yields drop
* Better-than-expected U.S. claims help dollar trim losses
* Swedish crown hit by inflation data
(Updates prices, adds comment, U.S. data, changes byline,
dateline; previous LONDON)
By Gertrude Chavez-Dreyfuss
NEW YORK, April 10 The dollar dropped to
three-week lows against the yen and the Swiss franc on Thursday
after minutes of the Federal Reserve's March meeting
disappointed investors positioned for a gradual tightening in
The greenback has fallen versus the yen in four of the last
five trading days. Against the Swiss franc, the dollar has
weakened for a fourth straight session.
The dollar, however, trimmed losses against the yen after
better-than-expected U.S. weekly jobless claims, suggesting an
improving labor market. Data showed U.S. weekly claims fell to
300,000, lower than the consensus forecast of 320,000. The
jobless claims level was near a seven-year low.
But the market's broad focus was on the minutes of the Fed's
March 19 meeting released on Wednesday. They showed officials
were worried the U.S. central bank's forecasts on interest rates
might appear to investors to be mapping out a more aggressive
cycle of rate hikes than was actually expected.
"The minutes were laced with dovish undertones," said Scott
Smith, senior FX trader and market analyst, at Cambridge
Mercantile Group in Calgary, sending "market participants into a
'risk-on' buying frenzy."
Investors also viewed the discussion in the minutes about
the amount of slack in the labor market as dovish, all of which
left the dollar struggling against most major currencies.
The dollar was down 0.1 percent versus the yen at
101.89 yen, having fallen to 101.39, its lowest since March 19.
The dollar slipped against the Swiss franc to 0.8768 franc, its
lowest in three weeks, as U.S. two-year Treasury yields
The greenback last traded at 0.8788 franc, down 0.1
"The Fed minutes are pushing back rate hike expectations
from the middle of next year to the latter part of 2015," said
Jane Foley, senior currency strategist at Rabobank.
"The yen is also being supported by a pullback in risk
sentiment after those Chinese data and disappointment earlier
this week that the Bank of Japan will not ease policy soon."
The dollar index hit a three-week low of 79.421, well
below a seven-week high of 80.599 set only last Friday. It last
stood at 79.524, flat on the day.
The Swedish crown, meanwhile, was the big mover in Europe.
It fell to its lowest in 3-1/2 months against the euro
amid higher-than-usual volumes after inflation data
fell short of expectations and cemented expectations the
Riksbank will cut interest rates in coming months.
The euro was last at 9.0577 crowns, up 0.9 percent.
Given the dollar's struggles, the euro also inched higher to
$1.3867, up 0.1 percent. But traders are wary of pushing
it higher, given expectations that the European Central Bank
could step up its rhetoric against a strengthening currency and
its impact on disinflation.
Bundesbank chief Jens Weidmann reiterated on Thursday that
if there is a prolonged period of low inflation, the ECB will
consider unconventional instruments. Last week, ECB chief Mario
Draghi flagged the chances of quantitative easing.
(Additional reporting by Anirban Nag in London; Editing by