The dollar eased in Asia on Tuesday as investors awaited remarks from the Fed chief and noted the first resignation of a senior Trump administration official with National Security Adviser Michael Flynn reportedly leaving over a failure to disclose the full extent of his conversations with Russian officials.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, eased 0.06% to 100.94. USD/JPY changed hands at 113.65, down 0.07%, while AUD/USD traded at 0.7671, up 0.41% as National Australia Bank said business confidence gained in January.
Investors also noted China’s consumer inflation rate quickened to 2.5% in January from a year earlier, the highest since May 2014 and a faster pace than expected.
Overnight, the U.S. dollar rose against a basket of the other major currencies on Monday as markets awaited testimony from Federal Reserve Chair Janet Yellen on Tuesday and Wednesday.
Yellen is scheduled to testify before the U.S. Senate on Tuesday and the House on Wednesday and investors will be watching her comments for clues on when the Fed could raise interest rates next.
A weekend summit meeting between U.S. President Donald Trump and Japanese Prime Minister Shinzo Abe went better than expected, leaving risk on the wane for now. Abe and Trump also agreed to hold an economic dialogue after Trump withdrew the U.S. from the Trans-Pacific Partnership agreement.
Demand for the dollar was also underpinned after recent remarks from Trump indicated that his administration would soon reform tax policy.
Trump said late last he would be announcing something over the next two or three weeks that would be “phenomenal” on the tax front, without providing any additional details.
Meanwhile, the Canadian dollar was steady against its U.S. counterpart, with USD/CAD at 1.3088 as Canadian Prime Minister Justin Trudeau met with Trump in the White House.
Trump has vowed to renegotiate the North American Free Trade Agreement with Mexico and Canada in order to secure better terms for the U.S.