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U.S. Dollar Regains Ground Following Fed Minutes

The value of the U.S. dollar moved to the downside earlier on Wednesday but has regained some ground in afternoon trading.

After falling as low as 95.89, the U.S. dollar has climbed back near the unchanged line but is currently down 0.07 points or 0.1 percent at 96.20.

The greenback is trading at 116.08 yen compared to the 116.16 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.1311 compared to yesterday's $1.1287.

The dollar bounced off its worst levels in reaction to the minutes of the Federal Reserve's latest monetary policy meeting.

The Fed minutes seemed to have a more hawkish tone, raising concerns the central bank will be more aggressive than anticipated.

According to the minutes of the December 14-15 meeting, members of the Fed are preparing to begin reducing the size of the central bank's approximately $8.8 trillion balance sheet soon after raising interest rates.

Kathy Bostjancic, Chief U.S. Financial Economist at Oxford Economics, said the minutes reflected the Fed's "rising discomfort with elevated inflation and stronger confidence in the recovery of the economy and the labor market despite the downside risks due to the Omicron variant."

"The hawkish tone of the minutes underscores the likelihood of three rate hikes this year, but also signals a reduction in the size of the balance sheet that could start by mid-2022," she added.

In U.S. economic news, payroll processor ADP released a report showing much stronger than expected private sector job growth in the month of December.

ADP said private sector employment spiked by 807,000 jobs in December after jumping by a revised 505,000 jobs in November.

Economists had expected private sector employment to increase by 400,000 jobs compared to the addition of 534,000 jobs originally reported for the previous month.

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