LONDON: The dollar nudged down on Monday, pulling back from six-month peaks against the yen as a US debt ceiling deal lifted risk appetite in world markets and dented the greenback’s safe-haven appeal.

US President Joe Biden on Sunday finalised a budget agreement with House Speaker Kevin McCarthy to suspend the $31.4 trillion debt ceiling until Jan. 1, 2025, and said the deal was ready to move to Congress for a vote.

Having briefly touched a six-month high of 140.91 yen during Asia trade, the dollar drifted lower and was last down almost a third of a percent at 140.17 yen.

The dollar index, which measures the US unit’s value against a basket of other major currencies, was also a touch softer around 104.23 but not far from last week’s two-month peaks.

The pull-back in the safe-haven dollar came as world stocks rallied on the positive news from Washington, although trade was generally subdued with parts of Europe, including Britain, on holiday along with the United States.

In Europe, the euro slipped 0.2% to $1.0709, showing little immediate reaction to news of a snap election in Spain.

The Aussie rose 0.35% to $0.6541, while the kiwi edged 0.2% higher to $0.6058.

“We’ve got a risk-positive response so far to the debt deal news,” said Ray Attrill, head of FX strategy at National Australia Bank.

Talk that the US rate hiking cycle may not be over as soon as hoped given signs of economic strength have bolstered the dollar and could support the currency even as US debt ceiling worries abate.

The dollar was on course for a monthly gain of about 3% against the yen. The dollar index has gained 2.5% in May.