Investing.com - The dollar slipped lower on Tuesday as a selloff in global equities markets triggered by the prospect of higher inflation showed some signs of letting up, with U.S. equity futures reversing overnight declines.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, slipped 0.17% to 89.42 by 02:57 AM ET (07:58 AM GMT).
Asian markets plunged for a second day but U.S. futures erased overnight losses as European trading got underway, dampening safe haven demand for the dollar.
The selloff in global equities followed Friday’s stronger than expected U.S. jobs report which investors took as a sign that the Federal Reserve could raise interest rates this year at a faster pace than previously expected.
The jobs report supported a recovery in the dollar after it fell to three year lows in late January, pressured lower by a range of factors, including concerns about U.S. trade protectionism and perceptions of narrowing yield advantage.
Expectations of tightening monetary policy tend to boost the dollar, as rising rates make the currency more attractive to yield-seeking investors.
The euro gained ground against the dollar, with EUR/USD climbing 0.51% to 1.2433.
The dollar pushed higher against the yen, with USD/JPY last at 109.18, up from an overnight low of 108.46. The yen tends to rise in times of market turbulence thanks to its safe haven status.
Sterling was also higher against the dollar, with GBP/USD rising 0.19% to trade at 1.3983.