* Dollar recovers after dip in Asian time
* Sterling down ahead of Brexit vote in parliament
* Aussie gyrates after RBA meeting
* Chinese FX reserves surprise with rise
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
By Patrick Graham
LONDON, March 7 The dollar steadied against a
basket of currencies on Tuesday, still stuck below highs hit in
December and January after two weeks in which expectations for a
rise in U.S. interest rates this month have soared.
A fall for sterling to a seven-week low and a yo-yo
performance for the Australian dollar after a meeting of the
country's Reserve Bank grabbed the most attention in a morning
session in Europe marked by minimal moves in major currencies.
The peaking of a year-long surge in metals prices has seen
the Aussie fall back and it was the hardest hit of the major
currencies in last week's swift move to price in a March rise in
Federal Reserve interest rates.
Against other currencies, however, the U.S. dollar has done
less well, failing to break conclusively below $1.05 to the euro
or 112 to the yen.
"If you had told me (two weeks ago) expectations for a March
hike would reach almost 100 percent I would have said we would
have been well below $1.05," said Niels Christensen, a
strategist with Nordea in Copenhagen.
"The disappointment in that move caused more profit-taking
on Friday but I don't see the euro moving much higher from
The dollar index rose less than 0.1 percent to 101.72
by 1100 GMT, trading broadly flat at 113.92 yen and $1.0576 per
Against sterling, buffeted by another round of downbeat
signals on retail sales and consumer demand, it gained 0.3
percent to trade under $1.22 for the first time since
Deutsche Bank strategist Oliver Harvey said he expected the
pound to suffer further in the next month as Britain launches
talks with Brussels on its planned departure from the European
"Market tension is starting to pick up again. The politics
should be a catalyst, particularly if the negotiations start off
on the wrong note," he said.
"People have talked about a bounce back in sterling (since
October), but really it has been a story of massive
underperformance. It is the only major currency down against the
dollar this year."
Comments overnight by Trump administration trade adviser
Peter Navarro pulled attention back to concerns over the White
House's attitude to trade and the dollar as officials prepare
for Group of 20 meetings later this month.
Navarro said on Monday that the $65 billion U.S. trade
deficit with Germany was "one of the most difficult" trade
issues, and that bilateral discussions were needed to reduce it
outside of European Union restrictions.
He has previously said an undervalued euro gives Germany an
edge over its trading partners.
Trump's policy pledges on domestic spending and taxation are
generally thought to point to a stronger dollar but both the
president and a number of his officials have indicated
dissatisfaction with the current strength of the greenback.
The U.S. publishes trade balance figures on Tuesday. One
surprise during Asian time was a rise in China's currency
reserves, which had been expected to fall again sharply in
"Given negative valuation effects this suggests there wasn't
any intervention to support the yuan in February," said Societe
Generale strategist Kit Juckes. "That helps Asian currencies for
now, including the Aussie."
The Australian dollar, up as much as 0.6 percent in Asian
time, was just 0.2 percent higher at $0.7594 by 1117 GMT.
For Reuters Live Markets blog on European and UK stock
markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
(Editing by Catherine Evans)