Investing.com - The dollar fell in Asia on Thursday with sentiment mixed as tensions between Iran and the U.S. over a ballistic missile test this week by Tehran sparked geopolitical risk worries while the Aussie gained on solid trade data.
U.S. National Security Adviser Michael Flynn said late Wednesday the White House has put Iran "on notice" over the missile test, raising concerns over steps that the U.S. may take. Later, Trump tweeted that Iran has usurped power in neighboring Iraq.
"Iran is rapidly taking over more and more of Iraq even after the U.S. has squandered three trillion dollars there. Obvious long ago!"
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, eased 0.11% to 99.58. USD/JPY changed hands at 113.05, down 0.17% and EUR/USD rose 0.09% to 1.0780.
AUD/USD jumped 0.72% to 0.7644.
In Australia, the AIG manufacturing index fell to 51.2 for January, still in expansion but well below the previous month level of 55.4. The trade balance for December came in at a surplus of 3.511 billion, wider than the 2.20 billion surplus expected.
Overnight, the dollar made modest gains on Wednesday as the Fed held steady as expected, but signaled an upbeat view on the economy and the prospect of sticking to a forecast of as many as three rate hikes this year.
The Federal Reserve held its fire on interest rates as widely expected on Wednesday, but was optimistic on the outlook for the economy in keeping its benchmark overnight lending rate target at 0.5% to 0.75% following a 25 basis point hike in December.
“Measures of consumer and business sentiment have improved of late,” the committee said in its statement, using new language that jibes with voices on Wall Street following the election of Donald Trump as president.
“Job gains remained solid and the unemployment rate stayed near its recent low,” the statement said, reflecting just a minor tweak from language at the December meeting.
As well, payroll processing firm ADP said non-farm private employment rose by 246,000 last month, easily surpassing forecasts for an increase of 165,000. The Institute for Supply Management said its index of manufacturing activity rose to 56.0 last month from December’s reading of 54.5. That was its highest level since November 2014. Analysts had forecast a smaller increase to 55.0.
The greenback had tumbled on Tuesday, after Donald Trump’s top trade adviser accused Germany of currency exploitation, saying it is using a “grossly undervalued” euro to exploit the U.S. and its trading partners. In separate remarks, President Trump criticized Japan and China, saying they devalued their currencies to the disadvantage of the U.S.
The remarks indicated that the dollar exchange rate could have a prominent role to play in Trump's 'America First' agenda. The single currency showed little reaction to an earlier report showed that German manufacturing growth accelerated to its fastest pace in three years in January.