U.S. dollar banknotes are seen in this illustration taken March 10, 2023. REUTERS
SINGAPORE, Jan 6 (Reuters) – The U.S. dollar retreated for a second day in Asian trading on Tuesday, as market jitters from U.S. military action in Venezuela eased and dovish comments from Fed officials spurred risk-taking on Wall Street.
The dollar index , which measures its strength against a basket of six currencies, was last trading at 98.216, down 0.2% and extending losses after snapping a four-day winning streak on Monday.
“The market isn’t really concerned about what’s happening on the geopolitical front, at least in the near term,” said Rodrigo Catril, currency strategist at National Australia Bank in Sydney. That environment “lessens the appeal for safe havens and we’ve seen the U.S. dollar on the back foot,” he added.
Financial markets are settling down after the shock U.S. capture of Venezuelan President Nicolas Maduro over the weekend sparked volatility in commodity markets. Maduro pleaded not guilty to narcotics charges in a Manhattan federal court on Monday.
Against the yen , the U.S. dollar was last off 0.1% at 156.255 yen, with the greenback weakening slightly following an auction of 10-year Japanese government bonds, which drew demand in line with the average over the past year.
The Australian dollar , which is sensitive to commodity prices, was last up 0.1% at a one-week high of $0.6724, nearing the highest in more than a year after copper prices hit a record. The New Zealand dollar was last up 0.2% at $0.5798.
The greenback retreated after hitting the highest levels in a month during Monday’s trading session, as U.S. manufacturing activity contracted more than expected in December and fell to a 14-month low.
The move in the dollar “lacked follow-through and quickly stalled as attention returned to U.S. macro fundamentals,” analysts from DBS wrote in a research note.
“The data undercut the USD’s upside by keeping Fed easing expectations intact and underscoring that geopolitical risk alone was insufficient to sustain a stronger USD with supportive U.S. data.”
The dollar was further pressured on Monday by dovish comments from Minneapolis Federal Reserve President Neel Kashkari, a voter on the central bank’s rate-setting committee this year, who told CNBC he sees a risk that the jobless rate could ‘pop’ higher.
Expectations of policy easing edged up after his remarks, though Fed funds futures are still pricing an implied 82.8% probability that interest rates will remain on hold at the U.S. central bank’s next meeting on January 27 to 28, compared to an 83.4% chance on Friday, according to the CME Group’s FedWatch tool.
Against the Chinese yuan trading offshore in Hong Kong , the U.S. dollar was last down 0.1% at 6.9769 yuan.
The euro was last up 0.1% at $1.1737, while the British pound strengthened 0.2% to $1.3562.
Bitcoin was last down 0.3% at $93,772.04, while ether slid 0.4% to $3,225.96.
Reporting by Gregor Stuart Hunter; Editing by Jacqueline Wong and Kate Mayberry
