The dollar fell against the euro and other major currencies on Thursday as bets dwindled on the Federal Reserve next month raising US interest rates for the first time in nearly a decade.

The euro posted the best gains among major currencies, rising 0.80 per cent against the dollar to top $1.12, due to turmoil in emerging market currencies touched off by China’s yuan devaluation last week.

Traders said the probability of a September hike by the Fed is now around 40 per cent, with many investors exiting dollar positions after Wednesday’s release of minutes from a Fed policymakers meeting contained nothing definitive about the timing of a rate increase. That was down from a probability of about 50 per cent at the end of July.

Short-term US interest rates in the over-the-counter market on Thursday suggested traders now see just a one-in-three chance of a September rate hike, down from 48 per cent a week ago.

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