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Tokyo - The dollar retreated on Tuesday as traders rowed back their bets on a September US interest rate hike after a top Federal Reserve official cautioned against moving too early.
Governor Lael Brainard argued that the bank should adopt a "moderate and gradual" approach to borrowing costs and avoid moves to "tighten policy pre-emptively."
Her comments stood in contrast to two Fed officials who signalled late last week that a rate hike could be justified as soon as this month.
Those remarks sent global markets reeling, with US and European shares plunging on Friday and Asia tanking on Monday.
"Investors seem close to certain that the Fed will forgo a rate hike next week, and that's weighing on the dollar," Etsuko Yamashita, chief economist at Sumitomo Mitsui Banking, told Bloomberg News.
The dollar was at ¥101.93, slightly stronger than ¥101.85 on Monday in New York, but still down from levels around ¥102.50 earlier on Monday in Asia. The euro fetched $1.1235 against $1.1234.
The greenback fell against most other Asia-Pacific currencies. The Australian dollar, Indonesia's rupiah and Malaysian ringgit each climbed 0.5% while the Thai baht gained 0.3% and the Singapore dollar put on 0.2%.
