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Dollar pares losses after fed official hints at rate hike sooner rather than later

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The dollar pared losses against a basket of currencies on Monday after a Federal Reserve official delivered hawkish remarks, while investors worried that a speech by President Donald Trump on Tuesday would not provide many details on his economic agenda.

Dallas Fed president Robert Kaplan reiterated on Monday his view a rate hike should come sooner rather than later, to keep up with rising inflation.

"Sooner rather than later means in the near future," Kaplan told journalists after speaking at an event with university students in Norman, Oklahoma.

The greenback was last up 0.04 percent against a basket of six major currencies at 101.13. It climbed as high as 103.82 on Jan. 3 as investors bet that Trump would enact policies that accelerate growth and boost inflation.

Treasury Secretary Steven Mnuchin said on Sunday that Trump would use the event to preview some elements of his sweeping plans to cut taxes for the middle class, simplify the tax system and make U.S. companies more globally competitive, with lower rates and changes to encourage U.S. manufacturing.

Mnuchin said last week that he wanted to pass significant tax legislation by August, which is later than many investors had hoped.

Mnuchin's comments seemed to indicate the details of tax reform will be known probably closer to the latter half of the summer, and we can most likely expect 3 percent growth towards the latter end of 2018, said Bipan Rai, senior macro strategist at CIBC Capital Markets in Toronto.

Both of those are somewhat at odds with what the market was hoping for in terms of near-term growth and more clarity around tax reform sooner rather than later, Rai said.

The dollar dropped 0.26 percent against the euro to $1.0585 and was little changed against the yen at 112.80 yen.

The euro also benefited from polls showing that far-right anti-EU leader Marine Le Pen was losing traction in France's presidential race.

French independent candidate Emmanuel Macron would easily beat Le Pen in the second round of the election in May, two opinion polls showed on Sunday.

Sterling slipped to a 12-day low of $1.2382 on a report that Scotland was preparing to call another independence referendum when formal Brexit negotiations are triggered in March.