* Dollar index off 0.15 percent, on track for February gain
* Profit-taking, month-end rebalancing driving flows
(Adds market action, changes dateline from LONDON)
By Karen Brettell
NEW YORK, Feb 28 The dollar weakened slightly on
Tuesday as investors awaited U.S. President Donald Trump's
speech to Congress for fresh indications of his economic plans
and as portfolios were rebalanced for month-end.
Investors were wary that Trump may disappoint those who
expect greater detail on how he will reform the tax code as he
focuses on domestic issues.
Price moves were muted as investors rebalanced portfolios
for the end of the month and were hesitant to take new positions
before Trump’s speech.
“Markets are a little bit cautious,” said Mark McCormick,
North American head of foreign exchange strategy at TD
Securities in Toronto. “I think it’s a mix of profit-taking
ahead of Trump, and also you have month-end rebalancing flows.
Those I think are the dominant drivers.”
The dollar rallied to a 14-year high soon after Trump won
the U.S. election in November, boosted by hopes he would
introduce large fiscal stimulus and reflationary plans, but the
greenback sagged in January and the first half of this month in
the absence of specifics on tax reform.
The dollar index against a basket of six major currencies
was last down 0.15 percent at 100.98. It is on track to
end February with a gain of around 1.5 percent.
Safe-haven currencies including the Japanese yen were
stronger, with the yen gaining 0.59 percent to 112.02.
"Forex looks to be trading a little bit risk off today,"
said Sam Lynton-Brown, a strategist with BNP Paribas in London.
The dollar/yen has also been highly correlated with U.S.
bond yields, with lower Treasury yields on Tuesday helping the
Investors also focused on when the Federal Reserve is likely
to next raise interest rates as a plethora of Fed officials
deliver speeches this week, culminating in an address by Fed
Chair Janet Yellen on Friday.
Expectations that the U.S central bank may raise rates when
it meets in March have risen in the past week on hawkish Fed
statements and stronger economic data, though market pricing is
still seen as being well below levels that would encourage the
Fed to move.
Futures traders are pricing in only a 33 percent chance of a
March rate increase, according to CME Group’s FedWatch Tool.
(Additional reporting by Patrick Graham in London; Editing by