The U.S. dollar fell on Wednesday but regained some of its lost ground after the release of the minutes of the Fed’s December meeting. The minutes of the meeting show that the Fed may need to raise interest rates faster to combat inflation. The U.S. dollar index fell 0.12% to 96.16 in late trading. After the minutes of the Fed’s December meeting were announced, the dollar narrowed its decline as yields rose. The minutes of the December 14-15 policy meeting released by the Federal Reserve on Wednesday showed that Fed policymakers stated at the meeting that the US labor market is "very tight" and may not only need to raise interest rates earlier than previously expected, but also need to reduce overall asset holdings. To curb high inflation.

Before Wednesday’s fall, the dollar had risen by more than 2% since the end of October, as people’s expectations that the Fed will begin to raise interest rates this year are increasing. After the announcement of the meeting minutes, the probability that the Federal Reserve will raise interest rates by 25 basis points at the March meeting is about 80% as digested by the fed funds rate futures.

The euro rose 0.24% to 1.1314 against the dollar, hitting an intraday high of 1.3146. Martins Kazaks, a member of the European Central Bank Management Committee, issued a hawkish remark: If the inflation outlook heats up, the European Central Bank will undoubtedly take action.

The U.S. dollar fell 0.04% to 116.11 against the yen, and the intraday drop reached 0.5%; the U.S. dollar rose 0.09% to 0.9169 against the Swiss franc.

The pound against the US dollar closed at 1.3557, up 0.20%, hitting a two-month high of 1.3599 during the session, the highest since November 9th, as the market's expectations that the Bank of England will raise interest rates as early as next month continue to heat up.

The U.S. dollar rose 0.38% to 1.2756 against the Canadian dollar. Data on Wednesday showed that Canada’s November building permit data was better than expected, but the MLI leading index fell for the second consecutive month. Investors focused on Friday’s Canadian employment data.

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