The dollar is at its lowest level in a month. The Federal Reserve points to a momentary halt in exchange rates
By Kevin Buckland TOKYO (Reuters) – The safe-haven dollar hovered near a one-month low on Thursday amid improving risk appetite after minutes of the Federal Reserve’s May meeting confirmed the potential for a pause in rate hikes after two more half-point increases in June and July.
The dollar lowest: The dollar index – which measures the currency against six major peers – edged 0.1% higher to 102.15 as a decline in Asian equities fostered demand for safe havens like the greenback.
However, the dollar index with a short-term growth of 102.45 after the release of the minutes on Wednesday remained largely close to the price of 102.
Analysts said there was nothing to suggest a further ramp up of the Federal Open Market Committee’s already hawkish stance. Wall Street rallied overnight on that outlook, while long-term Treasury yields held steady.
Atlanta Federal Reserve Chairman Rafael Bostic made the offer earlier this week. Stopping the best move in September to monitor its effects on the economy after two more 50-point increases in June and July on the economy.
The dollar index reached a nearly two-decade peak above 105 mid-month, but signs that aggressive Fed action may already be slowing economic growth have prompted traders to scale back tightening bets, with Treasury yields also dropping from multi-year highs.
The 10-year Treasury yield tracked sideways in Tokyo at 2.75%, continuing its consolidation around that level this week.
A soft DXY backdrop is forming (although) it’s still too early to call a long-term DXY peak,” Westpac strategists wrote in a client note, referring to the dollar index.
“DXY could range for a bit, but retracements into the 101 level are a buy.”
The dollar lowest
The dollar added 0.08% to 127.425 yen, while the euro was about flat at $1.0679. Sterling slipped 0.17% to $1.25615.
The risk-sensitive Aussie fell 0.25 percent to $ 0.70695. The New Zealand dollar fell 0.31 percent to $ 0.6458 after further declining gains after Wednesday’s meeting of the Bank of New Zealand, which hit a three-week high of $ 0.6514. Receipt
The dollar’s safe-haven appeal should keep it bid going forward, according to Commonwealth Bank of Australia strategist Kristina Clifton.
A strong commitment to fight inflation and a willingness to take monetary policy to restrictive levels “suggest the FOMC may fail to deliver a soft landing for the U.S. economy (and) signs the U.S. economy is losing momentum will support the USD and the JPY,” she wrote in a research note.