Dollar prices slipped against a basket of currencies on Thursday, weighed down by caution over the impending U.S.-China summit and geopolitical concerns. The dollar index versus a basket of six major currencies was down 0.1 percent at 100.480. It had risen to a three-week high of 100.850 overnight on an upbeat ADP report on U.S. private sector employment. But the currency tumbled from the three-week high despite hawkish-sounding minutes from the latest Federal Reserve meeting, which showed most policymakers think the Fed should begin trimming its $4.5 trillion balance sheet later this year. "Although the contents of the Fed minutes should have been supportive for the dollar, it was dragged down by ensuing price action in other markets, which saw equities react negatively to the minutes and Treasury yields fall," said Shusuke Yamada, senior strategist at Bank of America Merrill Lynch in Tokyo. Wall Street shares reversed an earlier rally and slipped on Wednesday, with sentiment soured as the Fed's minutes showed some policymakers viewed equity prices as quite high relative to standard valuation measures. "Geopolitical risks are also weighing on the dollar. The market is only starting to factor in recent developments regarding North Korea, and it now wants to figure out the geopolitical implications of the U.S.-China summit," Yamada said. Regional tensions have risen after North Korea test-fired a ballistic missile on Wednesday, just a day before a summit between U.S. President Donald Trump and Chinese President Xi Jinping, where North Korea's arms development drive will take centre stage. Financial markets are nervous over the summit because of Trump's constant criticism of China's economic policies. That caution has crimped broader investor risk appetite this week, depressing U.S. Treasury yields and dimming the dollar's allure. With the broader markets in a risk-averse mood, the Japanese yen gained on its perceived safe-haven status. The dollar was down 0.2 percent at 110.500 yen, having slid from a high of 111.450 struck overnight. "The dollar looks to remain under pressure, barring developments like a swift passage of the president's budget by the U.S. Congress or an agreement on tax reform," said Masafumi Yamamoto, chief currency strategist at Mizuho Securities in Tokyo. The euro rose 0.1 percent to $1.0674. The Australian dollar fell to a four-week low on nerves ahead of the Xi-Trump summit. The currency is sensitive to potential developments in China, Australia's main trade partner. The Aussie was down 0.4 percent and near $0.7537, its lowest since March 10. The pound was steady at $1.2479, after rising overnight on data showing growth in Britain's services sector. Source: Reuters
