Dollar firms as markets digest Ukraine summit
The dollar index rose 0.1% to 98.192 after U.S. President Donald Trump told President Volodymyr Zelenskiy on Monday that the United States would help guarantee Ukraine's security in any deal to end the war with Russia.
"At the moment, markets are cautious," said Tina Teng, an independent market analyst in Auckland, as traders weighed the possible implications for global energy markets.
"The U.S. dollar is going stronger against other currencies and the risk-on sentiment is still leading markets at the moment," she added, citing stock indexes at record highs.
Markets are also looking this week to the Federal Reserve's annual symposium in Jackson Hole for any clues on the likely path of interest rates. Fed Chair Jerome Powell is due to speak on the economic outlook and the central bank's policy framework.
Many investors are away for summer holidays in the northern hemisphere, while markets will be left with few catalysts amid a thin diary of data releases on Tuesday.
The euro held steady at $1.1656, down 0.04% so far in Asia, shuffling along the midpoint of the trading range it has sat in for the past two weeks.
"The dollar is the safe haven of choice when geopolitical risks are increasing," said Bart Wakabayashi, Tokyo branch manager at State Street.
If a Ukraine deal is reached that involves European countries taking up the burden, a relief rally could result in outflows from the euro and the British pound, he added. "You would suspect that would flow into the dollar, so we could see dollar strength."
Cryptocurrencies were an exception to the sleepy mood in markets, with bitcoin falling 1.3% to notch a third straight day of declines after hitting a record high on Thursday. Ether slumped 2.9%, extending losses for a second day after failing to breach a similar threshold last week.
Against the yen, the dollar was 0.1% weaker at 147.770 yen and showing little sign of willingness to exit the trading channel it has sat in all month, after an auction of long-dated Japanese government bonds received weaker demand than seen in July. The yield on the 20-year securities rose 1.5 basis point to 2.59% after the debt sale.
Japanese stock markets lost momentum on Tuesday, with the Nikkei 225 edging back from record highs seen earlier in the trading session and the Topix clinging to its early gains.
The Australian dollar fetched $0.6489, easing off gains after Westpac's consumer sentiment data for August rose to a 3-1/2-year high.
The Hong Kong dollar, which the city's de facto central bank allows to trade in a tight range of between 7.75 and 7.85 against the greenback, was one of the biggest movers, trading 0.3% stronger at 7.7944 to its U.S. counterpart as interbank rates surged to a three-month high.
The kiwi pared earlier gains and was last flat at $0.59245 .
Sterling also gave up on earlier signs of life, last trading at $1.3501, slumping back towards the low end of its range recorded over the past week. (Reporting by Gregor Stuart Hunter Editing by Shri Navaratnam and Kim Coghill)
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