FOREX-Dollar edges lower on Fed minutes, French politics

(Updates prices, adds comments) * Euro reverses course after earlier six-week low * French centrist

Bayrou

offers alliance to independent Macron *

FOMC

minutes disappoint hopes for March rate hike signals By

Sam Forgione

NEW YORK

, Feb 22 (

Reuters

) - The dollar fell against the euro and yen on Wednesday after

Federal Reserve

meeting minutes disappointed expectations for a hawkish tone and anti-EU French presidential candidate

Marine Le Pen

's perceived chances of winning fell. The minutes of the Fed's Jan. 31-Feb. 1 discussion, at which the U.S. central bank voted to keep rates unchanged, showed many

Fed

policymakers said it may be appropriate to raise interest rates again "fairly soon" should jobs and inflation data come in line with expectations. The minutes also showed, however, that among voting members there was much less urgency to raise rates with many seeing only a "modest risk" that inflation would increase significantly and that the Fed would "likely have ample time" to respond if price pressures emerged. The minutes came after Fed Chair

Janet Yellen

said last week that waiting too long to raise rates again would be "unwise" and gave a strong indication that the central bank remains on track to consider raising rates again by the summer. "The message was that there is still some hesitation, some caution versus the impression the markets got from the

Yellen

testimony last week," said

Sireen Harajli

, FX strategist at

Mizuho

in New York. French politics also weighed on the greenback and lifted the euro from a six-week trough of $1.0494 touched earlier to a session high of $1.0572, or as much as 0.4 percent higher on the day. Veteran French centrist

Francois Bayrou

said Wednesday he was offering an alliance with independent candidate Emmanuel Macron, a move that could give the former investment banker a much-needed boost to reach the runoff in May's presidential election. "Any possibility that

Le

Pen may not become the next president of

France

has been perceived as good for the currency, and that’s the reason why we saw a reversal," said

Kathy Lien

, managing director at

BK Asset Management

in New York. The dollar was last down 0.5 percent against the safe-haven yen at 113.13 yen after slipping as much as 0.7 percent to a session low of 112.91 yen in morning U.S. trading. The dollar index, which measures the greenback against a basket of six major rivals, was last down about 0.2 percent at 101.220 after hitting a one-week high of 101.720 in early trading. (Reporting by Sam Forgione; Additional reporting by Patrick Graham in London; Editing by

Andrew Hay

and

Lisa Shumaker

)
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