Dollar hovers above 6-1/2-month lows ahead of Fed minutes

NEW YORK, May 24 (Reuters) - The dollar hovered just above 6-1/2-month lows on Wednesday, as investors' focus shifted from U.S. politics to monetary policy ahead of the release of the minutes of the U.S. Federal Reserve's meeting in early May.

The dollar index, which tracks the greenback against six major rivals, was down 0.08 percent to 97.273.

"The dollar has taken quite a beating over the last month," said Minh Trang, senior currency trader at Silicon Valley Bank in Santa Clara, California.

"You are seeing a little bit of calming down this morning as there is very little economic or headline news to really sway the market one way or other."

Worries over U.S. President Donald Trump's recent firing of FBI Director James Comey, who was overseeing a probe into possible links between the president's team and Russia, and concerns about possible delays in Trump's efforts to implement his economic stimulus plans have recently pressured the dollar.

With Trump traveling abroad there were fewer political headlines and traders focused on the Fed meeting minutes due to be released at 2 p.m. E.T. (1800 GMT) on Wednesday, Trang said.

"Fed futures are pinning a relatively high probability that there is going to be a rate hike in June. The focus is more on the Fed's balance sheet and their strategy in terms of how to manage that," he said.

Interest rate futures implied traders saw about an 83 percent chance of a rate increase at the Fed's June meeting.

The dollar was marginally lower against the euro, which has enjoyed a bull run this month on factors including an ebb in French political concerns and upbeat euro zone data.

The side effects of the European Central Bank's unconventional policy tools have remained "contained," so there is no reason to deviate from the policy path already laid down by the ECB, President Mario Draghi said on Wednesday.

The euro was up 0.1 percent against the greenback at $1.1193.

Earlier, Moody's Investors Services downgraded China's long-term local and foreign currency issuer ratings by a notch, citing expectations that the financial strength of the world's second-biggest economy would erode in the coming years.

China's offshore yuan slipped in a knee-jerk reaction but the overall response was limited.

"Market reaction was muted as China’s massive foreign currency reserves help to insulate it from ratings downgrades," Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington, said in a note.