Dollar index slips from 20-year high, Fed rate path in focus

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Euro, Hong Kong dollar, U.S. dollar, Japanese yen, pound and Chinese 100 yuan banknotes are seen in this picture illustration, January 21, 2016. REUTERS/Jason Lee

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NEW YORK, May 6 (Reuters) – The dollar slipped against a basket of currencies on Friday after two volatile days as investors focused on how aggressive the Federal Reserve will be in hiking rates as it tackles rising inflation.

The dollar index hit a 20-year high overnight on safe haven demand, following a sharp stock selloff on Thursday driven by concerns about the Fed’s aggressive tightening and as European currencies weakened on worries about growth in the region.

It retraced some of these gains, however, as investors evaluated how much of the Fed’s hawkishness is already priced into the greenback, and as some analysts argued that inflation may be nearing a peak.

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