Feb 25 (Reuters) - The dollar index slid on Tuesday as U.S. growth and tariff concerns weighed on risk sentiment and oil prices, sending Treasury yields down for a fifth day.
U.S. equity indexes were under pressure after a report that the U.S. was planning restrictions on Nvidia chip exports to China and a sharp drop in consumer confidence in February. Market gyrations come ahead of month-end portfolio rebalancing and Nvidia earnings on Wednesday. U.S. Treasury Secretary Scott Bessent vowed to "re-privatize" growth by cutting government spending and regulation. He reiterated that he was paying particular attention to the Treasury 10-year yield and noted that tariffs are an important component of the administration’s growth and revenue strategy, adding that Australia may be able to help with efforts to diversify resource sourcing. Richmond Fed President Thomas Barkin touted a wait-and-see approach regarding central bank interest rate policy, noting the importance of consumer confidence to the economy. EUR/USD edged higher amid favorable moves in EU-US interest rate differentials and speculation about a possible Ukraine peace deal. The European Central Bank has room to cut its interest rates further if inflation eases to its 2% goal this year, said ECB policymaker Joachim Nagel, adding that the outlook for prices was "encouraging." The central bank is set to meet next week. Large EUR/USD option expires stationed between 1.04 to 1.06 continue to curb price movements. The pair holds a positive vibe into month-end as a nearby 21-day moving average looks to cross above its 100-day moving average at 1.0531. EUR/CHF is pace for its lowest close since early January while USD/CHF slid to a year-to-date low and tested its 100-day moving average at 0.8908 as CHF shorts are partly covered. GBP/USD approached its 1.2690 year-to-date high set Monday as lower Treasury yields weighed on the greenback. On the eve of his departure to meet U.S. President Donald Trump, UK Prime Minister Keir Starmer said he would increase annual defense spending to 2.5% of GDP by 2027 and target a 3% level. Dollar movements will guide the pair due to a dearth of U.K. data this week. Cable needs to eclipse its December high of 1.2811 to see upward momentum build.
A bout of risk-off trading sent USD/JPY to a four-month low of 148.56 just ahead of the London fix, with the pair later trimming losses as sentiment improved. Broadly lower commodity prices including a 2% slump in WTI oil weighed on AUD/JPY. Australia eyes January CPI on Wednesday.
Treasury yields fell 6 to 8 basis points. The 2s-10s curve was down about 3 basis points at +19.7bp.
The S&P 500 slipped 0.39% as tech and consumer shares retreated Oil tumbled over 2% to a two-month low on fears of slower energy demand.
Gold slipped 1.4% on profit-taking while copper dipped 0.69% Heading toward the close: EUR/USD +0.41%, USD/JPY -0.44%, GBP/USD +0.32%, AUD/USD -0.13%, =USD -0.42%, EUR/JPY -0.03%, GBP/JPY -0.13%, AUD/JPY -0.52%.(Editing by Burton Frierson Reporting by Robert Fullem)
