By Hideyuki Sano
TOKYO, May 24 (Reuters) - The dollar lost momentum on Thursday after the minutes of the Federal Reserve's last policy meeting were seen as dovish and U.S. President Donald Trump proposed looking into imposing new tariffs on imported cars.
The euro was hampered by concerns over economic slowdown in the currency bloc and political risks in Italy, staying near a six-month low against the dollar and a nine-month low versus the yen.
The dollar's index against a basket of six major currencies .DXY =USD stepped back to 98.897 from its five-month high of 94.195 following the Fed's minutes.
While the minutes showed most policymakers thought it likely another interest rate increase would be warranted -- in line with market expectations -- they also revealed the Fed would tolerate inflation rising above its goal for a time. minutes suggested the Fed is not in a hurry to raise interest rates. The U.S. stock markets seem to like that they were not too hawkish," said Ayako Sera, market economist at Sumitomo Mitsui Trust bank.
The dollar's fall accelerated as Trump appeared to have opened a new front in trade war by considering new tariffs, this time on cars, just days after Washington agreed with China to put "on hold" its plan to impose tariffs on $150 billion worth Chinese goods. the yen, the dollar shed 0.3 percent to 109.73 yen 110.03 JPY= in early Asian trade, a day after it had fallen 0.73 percent, its biggest fall in nearly three months.
The safe-haven Swiss franc also ticked up 0.15 percent to 0.9943 franc to the dollar CHF= . It hit a three-week high of 0.9894 per dollar on Wednesday.
The euro bounced back slightly to $1.1704 EUR= after hitting a six-month low of $1.1676 on Wednesday but the common currency was held back by economic and political worries in Europe.
IHS Markit's Euro Zone Composite Flash Purchasing Managers' Index (PMI), considered a good guide to the euro zone's economic health, sank in May to an 18-month low, suggesting the continent's strong growth last year has lost steam. were unnerved by political developments in Italy, where the coalition government proposed by the anti-establishment 5-Star and far-right League could tap eurosceptic economist Paolo Savona as economy minister. common currency was soft against the yen, hitting a nine-month low of 128.24 yen EURJPY=R on Wednesday.
The British pound GBP=D4 licked its wounds at $1.3374, after hitting a five-month low of $1.3305 following weak UK inflation data.