The dollar steadied broadly on Tuesday, hovering above 4-month lows, as a general risk-off mood in currency markets offset comments from Federal Reserve officials that suggested the US central bank was poised to continue its rate-hike cycle.
The dollar remained lower against the yen, however, edging just off its lowest since November 18. The yen has gained 4 percent against the greenback in the last nine days as markets have lost confidence in the Trump administration's ability to deliver tax reform and a promised public spending boost.
That waning of confidence has sparked risk aversion in currency markets, analysts said, prompting traders to remove or reverse bearish bets on the safe-haven yen, accelerating its gains. "You're seeing risk reduction ... but you're also seeing a flight to quality," said Douglas Borthwick, managing director at Chapdelaine Foreign Exchange.
"Dollar/yen seems to be the path of least resistance given that there's still a tremendous amount of positioning that's long dollar/yen and so you're getting shorts that are getting taken out of that." The dollar was down 0.4 percent against the yen at 110.26 yen. Against the Swiss franc, another historically safe-haven currency, the dollar fell 0.2 percent to 0.9835 franc.
The greenback got a temporary boost from a stronger-than-expected reading on US consumer confidence, which rose to its highest level since 2000. Those gains, however, were short lived. The index that tracks the dollar against six major currencies was little changed from its opening at 99.190, just above Monday's dip that took the index to its lowest since November 11.
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