NEW YORK, Jan 21: The dollar retreated on Friday, hurt by rising Iran tensions and comments from a Federal Reserve official suggesting the US tightening cycle is ending.

The Swiss franc, seen as a safe haven in times of heightened geopolitical concerns, drew support versus the dollar, analysts said, after a senior Iranian official confirmed Iran had started transferring assets from European accounts to other foreign banks. Iran has made the asset transfer in an attempt to preempt possible UN sanctions over its nuclear program.

The dollar’s losses extended after Richmond Fed President Jeffrey Lacker, a voting member on the US central bank’s policy setting committee, said on Friday there was at least one more US interest rate move left, after an 18-month tightening campaign. But this one rate hike has already been priced in by the markets.

People are interpreting his (Lacker) comments as more dovish than what the market had expected, said Grant Wilson, vice president of foreign exchange at Mellon Bank in Pittsburgh.

Rising US interest rates are generally dollar-supportive, since among other factors they draw foreign funds into dollar-denominated short-term deposits.

But again, we’re not really moving out of the range that we have established here. So until we see euro/dollar clearly below $1.2030 or above $1.2150, we would continue to bounce around. On dollar/yen, it’s holding support around 115 right now, Wilson added.

The next policy setting meeting for the Fed is on Jan. 31, which will be Alan Greenspan’s last as chairman.

Late in New York, the euro traded higher against the dollar at $1.2136, up 0.3 per cent from late Thursday. The single euro zone currency earlier had dipped modestly on a preliminary January reading of the University of Michigan’s US consumer sentiment index of 93.4, above forecasts for 92.5.

The dollar slipped 0.6 per cent to 1.2760 Swiss francs. Sterling rose about 0.6pc to $1.7706.

Against the yen, the dollar fell 0.1 per cent to 115.28 yen, after Bank of Japan Governor Toshihiko Fukui sounded upbeat on the prospect of ending Japan’s ultra-easy monetary policy.

Volatility due to upcoming elections in Canada, the top US down 0.9 per cent against the Canadian dollar to C$1.1524.—Reuters