US dollar retreats as risk appetite returns; US inflation dials back Fed view

New York

THE US dollar dipped on Friday (Feb 25), giving back some of the strong gains from the previous day, as investors gauged the latest round of sanctions on Russia and US inflation data was seen as unlikely to make the Federal Reserve overly aggressive at its next policy meeting.

The greenback on Thursday notched its biggest one-day percentage gain since Nov 10 to reach 97.74, its highest since Jun 30, 2020.

However, it gave back some gains after US President Joe Biden hit Russia with a wave of sanctions following that country's invasion of Ukraine, but refrained from imposing sanctions on Russian President Vladimir Putin and disconnecting Russia from the Swift international banking system.

On Friday, the US dollar index fell 0.459 per cent, with the euro up 0.59 per cent to US$1.1257. The euro fell to US$1.105 on Thursday, its weakest against the greenback since Jun 1, 2020.

Even with Friday's pullback, the US dollar was still on track for a third straight week of gains.

Before Thursday's jump - which sent the US dollar to its highest level since Jun 30, 2020 - the greenback had been subdued in recent weeks, as rising tensions in Ukraine fuelled expectations the Fed may be less aggressive in tightening policy as it attempts to rein in inflation.

The Russian rouble strengthened 1.67 per cent versus the greenback to 83.04 per US dollar after hitting hit a record low of 89.986 the day before.

The Japanese yen weakened 0.09 per cent versus the greenback at 115.65 per US dollar, while Sterling was last trading at US$1.34, up 0.19 per cent on the day.

In cryptocurrencies, Bitcoin last rose 1.4 per cent to US$38,937.21.

Ethereum last rose 2.58 per cent to US$2,703.53. REUTERS