Title: Dollar near one-month low as Fed minutes point to rates pause

May 26, 2022 02:15AM ET

By: AnalysisWatch

The dollar hovered near a one-month low on Thursday after the minutes of the Federal Reserve's May meeting confirmed the possibility of a pause in rate hikes after likely further increases in June and July.

The dollar index, which measures the currency against six other major currencies, rose 0.1% to 102.15 as a decline in Asian stocks boosted demand for safe-haven assets such as greenbacks.

However, after a brief rise to 102.45 immediately after the release of Wednesday's minutes, the index mostly consolidated around 102 points.

According to analysts, there was no indication of a further tightening of the Federal Open Market Committee's already restrictive stance. Wall Street rose overnight thanks to this outlook, while long-term Treasury yields held steady.

Atlanta Fed President Raphael Bostic suggested earlier this week that after two more 50 basis point hikes in June and July, a pause in September might be best to monitor the impact on the economy.

The dollar index hit a near 20-year high above 105 by mid-month and signs that the Fed's aggressive policy is already slowing economic growth have prompted traders to cut bets on tightening.

The yield on 10-year Treasuries moved sideways at 2.75% in Tokyo, continuing a consolidation around that level this week.

The dollar gained 0.08% to 127.425 yen, while the euro was roughly unchanged at $1.0679. The pound fell 0.17% to $1.25615.

The risk-sensitive Australian dollar fell 0.25% to $0.70695. The New Zealand dollar fell 0.31% to $0.6458 after giving back most of its gains following the Reserve Bank of New Zealand's meeting result released Wednesday, which pushed it to a three-week high of $0.6514.