Kevin Buckland

TOKYO (Reuters – The safe-haven US dollar traded at a low of one month on Thursday, aided by an improving risk appetite. Minutes from Federal Reserve’s May meeting indicated that the Federal Reserve could pause rate hikes following two further half-point increases in June/July.

Following a quick bounce after Wednesday’s minutes, the, which tracks the currency against six main peers, was unchanged at 102.03, and consolidating near that level.

The move was thwarted when the Asian trading session began. Analysts stated that there had been few surprises and that the day went as planned. Wall Street rallied overnight while the long-term Treasury yields remained steady.

Raphael Bostic of Atlanta Federal Reserve suggested that this week a pause may be the most prudent course of action to observe the impact on the economy after two additional 50-basis points hikes in July and June.

In a client note Westpac strategists stated that a soft DXY background is emerging, and risk appetite has firmed.

It’s too soon to say if DXY will peak long term, they said. DXY can range for a while, but retracements at the 101 level could be a good buy.”

However, the dollar index soared to a near two-decade-high above 105 by mid-month. But signs that Fed actions may have already slowed economic growth have led traders to lower their tightening bets. Treasury yields dropped from highs of multi-years.

Although the Tokyo index ticked up to 2.76 percent, it has largely remained at that level for this week.

Dollar was unchanged at 127.325 Japanese yen. Euro gained 0.14% to $1.06955 after Christine Lagarde, chief of European Central Bank, made comments in early this week indicating an end to negative eurozone interest rates for the third quarter. This sent the currency single to an all-time high of $1.0748 for a month on Tuesday.

At $1.2584, Sterling was unchanged. Sterling fell 0.07%, to $0.7082.

After losing most of Wednesday’s gains after the hawkish Reserve Bank of New Zealand meeting result, the New Zealand dollar fell to $0.6474. This was after it had risen to $0.6514 for three weeks.