The U.S. dollar drifted lower against major currencies on Wednesday, as investors await further insight on the U.S. Federal Reserve's time frame for slowing the pace of its monetary stimulus. The euro fetched $1.2803, up from $1.2781 late Tuesday in North America. The ICE dollar index , which measures the U.S. unit against six other major currencies, fell to 84.454 from 84.598. On Tuesday, the index hit its highest level since June 2010. The greenback on Tuesday also logged a three-year high against the British pound, with sterling hit after weaker-than-expected U.K. data on industrial production. The pound on Wednesday was higher, trading at $1.4891, up from $1.4861. The dollar index has gained roughly 1.6% this month, buoyed in part by expectations that the U.S. Federal Reserve will pull back on bond purchases if improvement in the economy meets the central bank's expectations. On Wednesday, investors will read through minutes from the Fed's meeting in June for further clues as to when the central bank may start 9tapering its quantitative-easing program. The Fed currently buys $85 billion a month in government and mortgage bonds. Quantitative easing tends to put pressure on the related country's currency. "Since QE was a negative for the [U.S. dollar] against most other majors, the dollar will be a winner on talk of its coming end, although it will lose some ground in the near term if tapering isn't announced in September," CIBC World Markets wrote in a report this week. In addition to the Fed minutes, Fed Chairman Ben Bernanke is scheduled to speak at an economists' conference in Boston on Wednesday afternoon and is expected to take questions from the audience. Last Friday's stronger-than-expected jobs report for June underscored expectations for tapering by the end of this year. Bernanke recently said the Fed may end asset purchases completely by next year. Meanwhile, the euro and the British pound have seen losses since the European Central Bank and the Bank of England last week each said their monetary policy would remain accommodative as regional leaders work to spur economic growth. The International Monetary Fund on Tuesday lowered its growth expectations for the euro zone this year, but it raised its view on the U.K. economy. Also weighing on the euro, Standard & Poor's on Tuesday cut its sovereign-debt rating for Italy by one notch to BBB, citing softening economic conditions. Against the Japanese yen, the dollar traded at ¥99.92, down from ¥101.05 on Tuesday. The Bank of Japan was due to wrap up its two-day policy meeting Thursday, and most analysts didn't expect a change in the central bank's policy or economic forecast. The Australian dollar was slightly up against the dollar, at 92.05 U.S. cents versus 91.80 U.S. cents, though off its lows hit after the release of weaker-than-expected Chinese trade data. The WSJ Dollar Index , which measures the currency against a slightly wider basket than the ICE dollar index, slipped to 76.05 from 76.29. Source : Marketwatch
