SYDNEY/TOKYO, May 21 (Reuters) - The dollar stepped back in
Asian trade on Thursday but held close to a two-week peak
against a basket of major currencies as investors focused on the
pace of the U.S. Federal Reserve's coming interest rate hikes.
Minutes from the Federal Reserve's April meeting contained
no major surprises, doing little to change expectations that the
Fed will probably wait until late this year before raising
rates.
The dollar index stood at 95.394, having risen as
high as 95.837 on Wednesday, recovering from a four-month low of
93.133 hit a week ago after a series of disappointing U.S. data.
"The sentiment is turning favourable on the dollar after all
the position-unwinding has been done," said a trader at a
Japanese bank in Tokyo.
Minutes of the Fed's meeting showed policymakers believed it
would be premature to raise interest rates in June, in line with
a view widely held in the market following a dismal start to the
year.
"Although they contained no outright surprises, the April
FOMC minutes showed a few signs of participants growing more
concerned about downside risks to the economic outlook, with
little mention of offsetting upside risks," analysts at JPMorgan (LSE: JPIU.L - news)
wrote in a note to clients.
"At this point, we also consider every meeting going forward
to be "live", although the last several months' deterioration in
the growth data leave June or July looking increasingly
unlikely. We still look for lift-off in September."
Against the yen, the greenback stood at 121.17 yen, having
scaled a two-month peak of 121.49 on Wednesday.
The euro last traded at $1.1117, having fallen as far
as $1.1062, a low seen late in April, dogged by worries over
Greece.
Minutes of the Bank of England's May meeting showed all nine
members voted to keep rates at a record low 0.5 percent, but two
felt the decision was finely balanced between keeping rates on
hold or raising them.
That was enough to spark a turnaround in sterling, which had
been sold off earlier in the week after Britain's annual rate of
consumer price inflation fell below zero for the first time in
more than half a century.
The pound last traded at $1.5553, recovering from a
one-week low of $1.5447.
A Chinese manufacturing survey showed continuing weakness
there, although widespread expectations that the Chinese
authorities would act on any signs of a serious downturn limited
the market reaction.
The Australian dollar stood at 79.00 U.S. cents,
extending its pullback from 81.64 cents last Thursday.
(Editing by Richard Pullin and Alan Raybould)
By Ian Chua and Hideyuki Sano
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