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Dollar Steadies, Sterling Drops

The dollar steadied against its peers early this morning after the Federal Reserve’s policy meeting minutes took the wind out of its advance, with the market awaiting comments by central bankers and U.S. data for its next cues.

The greenback had rallied earlier in the week after upbeat U.S. economic indicators lifted Treasury yields to multi-week highs. The surge helped the dollar index come off a nine-month low of 95.470 reached last week as investors increased expectations for central banks in Europe to begin scaling back monetary stimulus later this year.

But the dollar’s advance stalled after the Fed’s minutes on its June 13-14 policy meeting released on Wednesday showed a rift among policymakers over the pace of future U.S. rate increases and disappointed some dollar bulls.

The market has gotten used to the dollar strengthening this week. So even if upcoming indicators like the U.S. ISM report are in line with expectations, the dollar may drop on disappointment. The currency may need a strong upside data surprise to move further up.

Sterling dipped after Wednesday’s Markit/CIPS survey showed growth across British services companies fell to a four-month low in June.

Business expectations sank to their weakest level since last July’s dip after the vote to leave the European Union, and it was not far off lows last reached in late 2011. Growth in new orders hit a nine-month low.

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