Dollar on defensive

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TOKYO: The dollar was on the defensive on Thursday after the Federal Reserve dialled down on some of the more hawkish policy expectations in the market, while the euro edged back up towards a 6-1/2-month high.

Fed policymakers agreed they should hold off on raising interest rates until they see evidence that a recent economic slowdown was transitory, the minutes from their last policy meeting showed on Wednesday.

The minutes were seen to indicate heightened Fed caution towards interest rate hikes and took the wind out of an earlier bounce by the dollar, which had been plagued recently by U.S. political concerns centred on President Donald Trump.

The dollar index against a basket of major currencies .

was down 0.3 percent at 96.972. The U.S. currency was pressured by lower Treasury yields, which fell on the Fed´s signal of a gradual approach to raising rates.

"The way Treasuries reacted to the Fed minutes shows that market participants do not consider a rate hike in June a done deal," said Makoto Noji, senior strategist at SMBC Nikko Securities. The dollar was little changed at 111.635 yen, pushed away from a one-week high of 112.130 scaled the previous day.