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Dollar leaps after Fed minutes hint at QE exit

The dollar surged higher Wednesday after the Federal Reserve minutes of its latest policy meeting suggested the central bank could begin tightening its ultra-loose monetary policy sooner than expected.

The euro bought $1.3283 around 2200 GMT, down from $1.3390 at the same time Tuesday.

The dollar also gained strongly against the British pound, which fetched only $1.5231 compared with $1.5425 late Tuesday.

Against the Japanese currency, the dollar edged up to 93.61 yen from 93.54 yen, while the euro fell, to 124.37 yen from 125.24 yen.

The euro slid below the $1.33 level just after the Federal Open Market Committee minutes were published, to levels last seen in late January.

The FOMC minutes of its January 29-30 meeting rattled the currencies, equities and commodities markets, said Kathy Lien of BK Asset Management.

The minutes said a "number" of participants believed an ongoing evaluation of the $85 billion per month asset purchases "might well lead the committee to taper or end its purchases before it judged that a substantial improvement in the outlook for the labor market had occurred."

Lien said that "in plain English, this means Fed officials could end quantitative easing way before they reach their 6.5 percent unemployment target."

The US jobless rate stands at 7.9 percent, well above the Fed threshold, and was expected to fall only slowly amid the economy's sluggish recovery from the deep 2008-2009 recession.

The dollar rose to 0.9272 Swiss francs from 0.9225 late Tuesday.

"The US dollar continued to appreciate as the FOMC minutes highlighted a hawkish tone for monetary policy," said David Song of DailyFX.

"The dollar may consolidate over the next 24 hours of trading as the economic docket is expected to show easing price pressures in the world's largest economy."