LONDON: The dollar fell against the yen and euro on Thursday, paring gains after minutes of January’s Federal Reserve policy meeting showed officials were concerned about hiking interest rates too soon.
The greenback shed 0.2 percent to 118.58 yen after coming down from a peak of 119.41 overnight. The dollar index added to losses and was down 0.3 percent at 93.940 but managed to keep above this week’s trough of 93.801.
“The two pillars of a strong dollar scenario: the first being strong fundamentals and the next being June rate hike expectations, are beginning to wobble,” said Junichi Ishikawa, market analyst at IG Securities in Tokyo.
Although the closely-watched non-farm payrolls data released earlier this month proved robust, recent U.S. economic data have not been consistently strong.
Against such a backdrop Fed policymakers expressed concern that raising interest rates too soon could chill the U.S. economic recovery in the minutes issued on Wednesday.
Widening the scope of factors to consider, they also noted the potential negative impact from global factors such as China’s economic slowdown and fighting in the Middle East and Ukraine.
“A few weeks ago it was about oil, then Greece and now its the Fed,” said Bart Wakabayashi, head of forex at State Street in Tokyo.
“Market participants had tried distilling what the Fed was looking at into a few factors, but that is not easy any more as it has broadened its horizons. Players tend to make trading easier by making simple correlations, but we have to look deeper now to gauge sentiment,” he said
