US dollar down as investors wary of geopolitical risk; await consumer data

[NEW YORK] The US dollar fell on Monday as US Treasury yields dipped and traders consolidated Friday's gains on low volume to start the holiday-shortened US trading week.

The US dollar index, which tracks the greenback against six major currencies, rose to 101.34 in Asian trading, its highest since March 15. But that move reversed as Treasury yields fell on geopolitical jitters about the French presidential election, escalating tensions in Syria and growing unease about North Korea.

The index was last down 0.15 per cent at 101.04.

The US dollar see-sawed against the yen throughout the day, but was last little changed at 111.01 yen.

The euro was also little changed against the US dollar at US$1.0590 after earlier falling to its lowest since March 9.

"There's not a lot of conviction right now in the forex market, just consolidative patterns and some back and forth trading," said Erik Nelson, currency strategist at Wells Fargo Securities in New York.

Investors were trading cautiously as they looked toward US retail sales data and a reading on consumer sentiment due later this week, analysts said.

"There's still a caution in the air ahead of big numbers later in the week on the all-important consumer," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.

"That's capping upside at the moment." Federal Reserve Chair Janet Yellen is scheduled to make a speech at the University of Michigan's Ford School of Public Policy on Monday afternoon.

Her remarks follow comments from New York Fed president William Dudley on Friday in which he said the Fed might avoid raising interest rates at the same time that it begins shrinking its balance sheet, prompting only a "little pause" in the central bank's rate hike plans.

Investors will be parsing Ms Yellen's comments to see if she backs Mr Dudley's stance on reducing the US central bank's balance sheet or slowing the pace of interest rate tightening.

"If she, perhaps, corroborates some of his more hawkish comments, that could support the dollar," Wells Fargo's Mr Nelson said. He noted, however, that the chair is generally quite measured in her public comments, giving markets little reason to be bullish.

Volume was lower than usual due to many traders being away for the Passover and Easter holiday breaks.

REUTERS