The dollar weakened slightly on Tuesday as investors awaited US President Donald Trump's speech to Congress for fresh indications of his economic plans and as portfolios were rebalanced for month-end. Investors were wary that Trump may disappoint those who expect greater detail on how he will reform the tax code as he focuses on domestic issues.
Price moves were muted as investors rebalanced portfolios for the end of the month and were hesitant to take new positions before Trump's speech. "Markets are a little bit cautious," said Mark McCormick, North American head of foreign exchange strategy at TD Securities in Toronto. "I think it's a mix of profit-taking ahead of Trump, and also you have month-end rebalancing flows. Those I think are the dominant drivers."
The dollar rallied to a 14-year high soon after Trump won the US election in November, boosted by hopes he would introduce large fiscal stimulus and reflationary plans, but the greenback sagged in January and the first half of this month in the absence of specifics on tax reform.
The dollar index against a basket of six major currencies was last down 0.15 percent at 100.98. It is on track to end February with a gain of around 1.5 percent. Safe-haven currencies including the Japanese yen were stronger, with the yen gaining 0.59 percent to 112.02.
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