FOREX-Dollar trips over Fed minutes, Aussie eyes jobs test

Reuters

* Dollar hits one-week lows vs currency basket

* Fed minutes indicate bond-buying will end in October

* Aussie eyes local jobs and Chinese trade data

By Ian Chua

SYDNEY, July 10 (Reuters) - The dollar started at one-week lows against a basket of major currencies on Thursday, coming under some pressure after minutes of the Federal Reserve's June meeting gave no clear indication on when interest rates will rise.

The minutes confirmed that the Fed's monthly bond purchases would end in October and that policymakers debated about the complexities of unwinding a stimulus program that had flooded the financial system with over $2 trillion.

Wall Street bounced back from a two-day selloff in the absence of any guidance on whether rates will be raised by mid-2015 as speculated, Treasury yields rose while the dollar was sold down.

The dollar index shed about 0.2 percent to a one-week low of 79.983, where it hovered early in Asia. Benefiting from renewed softness in the greenback, the euro rose to a one-week high of $1.3649.

"The market had likely positioned for a hawkish tone to the minutes given the upward revisions to Fed rate forecasts, as well as the fact that these tend to reflect a broader set of FOMC members, both non-voters and voters, than the post-meeting statement," analysts at Barclays wrote in a note to clients.

Against the yen, the dollar briefly dipped to a one-week low of 101.44 before bouncing back to 101.60, while the euro managed a more energetic hop to 138.77 from a low of 138.14.

Speaking in London on Tuesday, European Central Bank President Mario Draghi reiterated the ECB is ready to use "unconventional instruments" if needed to boost growth, but devoted most of his speech pressing for closer European integration to deliver growth and jobs.

Sterling rose to $1.7157, moving back within easy reach of a six-year high of $1.7180. The Canadian dollar rose to C$1.0641 per USD, near a six-month high of C$1.0620.

The Australian dollar pushed further above 94 U.S. cents, defying the country's central bank assessment that it was 'overvalued by most measures'. It last traded at $0.9411 , not far from the overnight high of $0.9425.

The Aussie has retraced almost all of last Thursday's fall from $0.9443 to $0.9327 made after Reserve Bank of Australia Governor Glenn Stevens warned that investors were under-estimating the risk of a sharp correction in the currency.

Whether the Aussie will retest its 2014 peak of $0.9505 depends on the local employment report due at 0130 GMT and Chinese trade figures at around 0200 GMT.

Ahead of the data, Asian markets are likely to see little fanfare, mirroring a dire two hours of defence-dominated football between the Netherlands and Argentina.

The South American country eventually prevailed 4-2 in a penalty shoot-out.

(Editing by Richard Pullin)

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