Dollar falls for second day as Ukraine war fears lessen

London

THE US dollar fell for a second day on Wednesday (Feb 16) as investors became less worried about the risk of Russia invading Ukraine and awaited the release of minutes from the US Federal Reserve's January meeting.

European equity markets were mixed, having rallied on Tuesday after Russia said it would withdraw some troops from Ukraine's border. US President Joe Biden said more than 150,000 Russian troops were still in a "threatening position", and Nato urged Moscow to prove it was pulling back.

Ukraine said the online networks of its defence ministry and 2 banks were hit by a cyberattack.

In currency markets, the moves were small. The US dollar index edged lower and was down 0.2 per cent on the day at 95.847 by 1213 GMT.

Long-standing expectations that the US Federal Reserve will raise rates provided a reason for the dollar's losses to be limited.

Markets are pricing in a 57.5 per cent chance of a 50 basis points (bps) hike at the Fed's next meeting on Mar 16, and a 42.5 per cent chance of a 25 bps.

The minutes from the Fed's January meeting will be released later in the session.

As oil prices recovered, the Canadian dollar strengthened slightly against the US dollar, as did the Norwegian krone.

The Australian dollar, which is seen as a proxy for risk appetite, was up 0.4 per cent at US$0.7177 while the New Zealand dollar was also slightly higher on the day.

The safe-haven yen was a touch lower versus the dollar, at 115.700.

The euro edged higher, up 0.2 per cent on the day at US$1.13825. Euro-swiss was up 0.2 per cent, having gained 0.4 per cent so far this week.

The British pound was up 0.1 per cent against the dollar at US$1.35605 but steady versus the euro, after data showing UK inflation hit a nearly 30-year high of 5.5 per cent.

The Bank of England (BOE) has already raised interest rates twice since December and financial markets expect a further rate rise on Mar 17 after the BOE's next meeting.

In cryptocurrencies, Bitcoin was little changed, down 1.1 per cent at US$44,098. REUTERS