* Dollar index dips but maintains earlier gains
* Euro gains modestly, though remains under $1.19
NEW YORK, Aug 20 (Reuters) - The U.S. dollar on Thursday afternoon was slightly lower on the day as rising technology stocks bolstered risk assets but held onto gains made Wednesday after less dovish-than-expected minutes from last month’s U.S. Federal Reserve policy meeting lifted the greenback off a two-year low.
Gains in Apple Inc, Amazon.com Inc and Microsoft Corp on Thursday drove higher the three main U.S. stock indexes. The risk-on move diminished demand for the dollar, which saw its index fall modestly in afternoon trade, last down 0.24% to 92.764.
But the dollar index was still about 0.70% higher than the two-year low of 92.124 hit on Tuesday, as the effects of the Fed’s meeting minutes released Wednesday and Thursday’s weak employment data persisted.
The Federal Open Market Committee minutes released on Wednesday prompted dollar bears to buy into the heavily shorted currency, fueling its biggest one-day surge in more than two months. Bears have reaped rich returns from shorting the greenback in recent weeks as the United States has struggled to tame the coronavirus pandemic and the unprecedented policy stimulus unleashed by the Fed had darkened the outlook for the safe-haven dollar.
But with short bets approaching historical extremes and a resurgence of COVID-19 cases in Europe, investors are turning less bearish on the greenback.
“Severe selling that drove the U.S. dollar to 27-month lows eased after minutes from the Fed’s last meeting were read as less dovish. The details of the Fed’s late July meeting stopped short of signaling an imminent shift to putting a lid on Treasury yields or allowing inflation to run hotter,” said Joe Manimbo, senior market analyst at Western Union Business Solutions.
The tone of the minutes “catalyzed some profit-taking for one of the summer’s blockbuster and profitable trades: shorting the greenback,” Manimbo said.
Also bolstering the dollar was a Labor Department report on Thursday that showed the number of Americans filing a new claim for unemployment benefits rose unexpectedly to 1.106 million for the week ended Aug. 15, from the 971,000 the week before. The previous week’s level had marked the first time since March that new claims had registered below 1 million.
The euro - the biggest beneficiary of dollar weakness - this week fell back below $1.19, though it was slightly higher on Thursday at $1.186.
Reporting by Kate Duguid in New York and Julien Ponthus in London Editing by Paul Simao and Lisa Shumaker
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