Dollar stays clear of lows, Fed divided over rates outlook

The dollar dipped on Thursday, but held above its recent lows after minutes from the Federal Reserve showed policymakers did not seem to be in a rush to cut interest rates and that several were open to hikes if inflation proved sticky, Reuters reported.

Investors were also nervous about a reported buildup of U.S. forces in the Middle East and a potential U.S.-Iran conflict, which lifted oil prices and safe-haven assets.

The euro , meanwhile, held steady around $1.18, having fallen sharply the day before, following a report that European Central Bank President Christine Lagarde planned to leave before her term ends in October next year.

Fed minutes released on Wednesday showed policymakers divided over where to take U.S. rates and suggested that the next chairman, due to start in May, will have a hard time pushing through rate cuts.

Several policymakers are expecting productivity gains to dampen inflation, the minutes said, but "most participants" cautioned progress may be slow and uneven. Several even indicated hikes are possible if inflation stays above target.

"This suggests there isn't a great deal of urgency to cut rates again, at least not until after current chair (Jerome) Powell's term ends in May," said Peter Dragicevich, Asia-Pacific currency strategist at Corpay.

Data on Wednesday showed U.S. factory production increased by the most in 11 months in January and rises in capex and housing starts. Markets are looking ahead to global purchasing managers' index figures and U.S. gross domestic product data, due on Friday.