The minutes from the US Federal Reserve’s most recent meeting due later on Wednesday are expected to confirm that a rate hike is still in the distance

The US dollar steadied but remained near a six-year low against its Canadian counterpart and nursed losses against European currencies as expectations that US interest rates will remain low undermined the greenback.

The minutes from the US Federal Reserve’s most recent meeting due later on Wednesday are expected to confirm that policymakers think a rate hike is still in the distance.

Investors will also be scrutinising consumer price data in Britain and Canada later in the trading day to determine how quickly major economies will be forced to rein in their accommodative monetary policy, which holds the key to the dollar’s trend in the medium term.

I’m most concerned about the relative strength of inflation, said Masafumi Yamamoto, chief currency strategist at Mizuho Securities in Tokyo. The recent release of US consumer prices printed quite high. If Britain and Canada remain below that level, it suggests the pace of normalisation in the United States will be faster. Dollar selling may not last much longer.

Against the Canadian dollar, the greenback traded at C$1.2076, close to its weakest since May 2015.

The British pound bought $1.4182, which was near its strongest level since late February.

The euro was steady at $1.2219.

The dollar was little changed at 109.02 yen and 0.8982 Swiss franc.

Data last week showing US consumer prices rose 4.2 per cent in April from a year earlier was the fastest increase in more than a decade, which stunned investors.

Fed policymakers have said this is a temporary spike and reiterated that they expect interest rates to remain low, which has taken some steam out of the dollar, but not all are convinced by the Fed’s persuasion.

The dollar index against a basket of six major currencies was quoted at 89.833, close to the lowest since late February.

Expectations for policy tightening in Canada and the gradual lifting of coronavirus restrictions in Britain have lifted both countries’ currencies, but any suggestion of benign inflation could help the greenback recoup some of its losses.

Elsewhere, the Australian and New Zealand dollars eased slightly as the Antipodeans struggled to break through heavy technical resistance, but sentiment remains positive due to rising commodity prices, some traders said.