* Dollar index races to fresh 11-month highs
* Minutes showed Fed debated about raising interest rates
* BOE minutes also surprise with two members voting to hike
* China flash PMI survey next in focus
By Ian Chua
SYDNEY, Aug 21 The U.S. dollar traded at
11-month highs against a basket of major currencies early on
Thursday, having been given a second wind after minutes of the
Federal Reserve's July meeting sounded slightly hawkish.
The dollar index, still basking in the afterglow of
Tuesday's upbeat U.S. housing data, climbed as far as 82.277,
reaching a high not seen since early September. It has broken
clear of the 81.188/81.716 range held for much of this month.
The minutes showed policymakers debated on whether interest
rates should be raised earlier given a surprisingly strong jobs
market recovery. Most officials, however, wanted further
evidence before changing their view on when rates should be
In any case, it was enough to send U.S. Treasury yields
sharply higher with the two-year hitting a two-week
high just shy of 0.5 percent.
That in turn underpinned the greenback, which rose to its
highest in over four months against the yen at 103.85,
not far from the April peak of 104.13. A break there could see
the market aim for the 2014 high of 105.45 set in January.
Other currencies also ceded ground against the greenback,
notably the euro which pierced through the Nov. 7 trough of
$1.3295 to reach an 11-month low at $1.3255.
The New Zealand dollar, already out of favour after the
central bank last month paused its tightening cycle, skidded to
a 5-1/2 month low of $0.8365.
Some analysts warned dollar bulls might be reading too much
into the minutes.
Indeed, while discussions around the table at the Fed
meeting is one thing, the final opinion of the Fed Chair and her
voting members is quite another.
"The "significant underutilization of labor resources" view
of the labour market carries the day as far as monetary policy
is concerned," said David de Garis, senior economist at National
Australia Bank, referring to Janet Yellen's concerns about jobs.
"The market now waits for Dr Yellen's address to the Kansas
City Fed Jackson Hole conference Friday," he added.
While Fed officials may be debating about the merits of an
earlier tightening, two policymakers at the Bank of England
(BOE) actually voted for a rate hike this month.
The unexpected move revived speculation the BOE might yet
raise interest rates this year.
That saw sterling hold up fairly well against the broadly
firmer greenback and actually rise on the euro, which plumbed a
one-week low at 79.68 pence.
In Asia, all eyes will be on a preliminary survey of China's
manufacturing sector due at 0145 GMT. Last month, the sector
posted its strongest growth in at least 1-1/2 years as new
orders surged to multi-month highs.
(Editing by Eric Meijer)