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By Bloomberg

The dollar retreated, while Asian bonds advanced with precious metals after Federal Reserve Chair Janet Yellen signaled U.S. interest-rate increases aren’t imminent. Chinese stocks fluctuated after a week-long break.

The Bloomberg Dollar Spot Index lost 0.2 percent by 1:20 p.m. in Tokyo, as the U.S. currency slid 0.5 percent against the Malaysian ringgit and 0.2 percent versus the yen. Yields on South Korea’s 10-year debt fell six basis points and similar Japanese rates dropped three basis points. Gold snapped a four- day drop and silver jumped 2.3 percent. U.S. oil was at $49.27 a barrel after its longest slump since August. The Shanghai Composite Index was little changed.

The Dollar Spot Index is set to fall for the first month since June after Yellen made clear no rate increase is imminent. The Fed chief told senators on Tuesday that a shift in guidance from the central bank would signal the economy has improved to the point where an increase could come at any meeting. A private gauge of Chinese manufacturing unexpectedly signaled expansion as mainland markets resume Wednesday after New Year holidays. The U.S. updates on record oil stockpiles.

“The global economic recovery is on track and our base scenario is that a U.S. rate hike will take place in June,” said Daphne Roth, the head of Asian equity research at ABN Amro Private Banking in Singapore, which manages about $218 billion. “Of course, the Fed has some flexibility to delay that especially if inflation comes in below target.”

Aussie, Kiwi

The Dollar Spot Index dropped 0.3 percent on Tuesday, reversing a gain of as much as 0.5 percent, after Yellen began speaking. The won advanced 0.8 percent to 1,101.61 per dollar, while the ringgit gained to 3.6252 a dollar. The yen was at 118.71 a dollar.

The greenback weakened at least 0.6 percent against the Australian and New Zealand dollars today. The South Pacific nations’ currencies also received a boost from the better-than- expected factory gauge in China, their biggest trading partner.

The MSCI Asia Pacific Index added 0.7 percent to extend a five-month high, while Standard & Poor’s 500 Index futures were little changed after the gauge rose to a record.

Yellen delivered her semi-annual testimony before the U.S. Congress after minutes from the Fed’s January meeting showed some officials had argued for keeping rates near zero for longer amid risks to the economy. The Federal Open Market Committee pointed to a strengthening dollar, international flash points from Greece to Ukraine, and slow wage growth as weakening the case for the first U.S. rate increase since 2006.

Shanghai Shares

“The less hawkish message from Yellen has seen a bit of profit taking in U.S. dollar longs,” said Sue Trinh, senior currency strategist at Royal Bank of Canada in Hong Kong. “If you look at Yellen’s testimony in isolation, it was probably a little disappointing to the hawks. We think the overarching message was essentially neutral.”

The Shanghai Composite Index swung between a gain of 0.3 percent and a drop of 0.7 percent. The world’s best performing major benchmark gauge in 2014 went into the Lunar New Year holiday at an almost one-month high, rising for seven days through Feb. 17.

The Hang Seng China Enterprises Index, which tracks mainland shares listed in Hong Kong, climbed 0.5 percent today, buoyed by insurers and banks, while the Hang Seng Index added 0.4 percent.

China PMI

The China manufacturing purchasing managers’ index for February from HSBC Holdings Plc and Markit Economics came in at 50.1, unexpectedly rising from 49.7 in January after economists projected a reading of 49.5. Readings below 50 signal contraction in the sector.

Japan’s Topix index swung between gains and losses, while the Kospi index in Seoul increased 0.7 percent. The NZX 50 Index jumped 2.1 percent in Wellington as Xero Ltd. soared 26 percent after raising cash from U.S. investors.

The Dow Jones Industrial Average also rose to a record, gaining 0.5 percent to 18,209.19 Tuesday.

Euro-area finance ministers agreed to extend a bailout program for Greece Tuesday after the government said it would undertake measures including a revamp of tax collection. Greek assets surged, with the ASE Index up 9.8 percent and 10-year bond yields falling for a fifth day, reaching 8.49 percent, the lowest level since January.

Gold climbed 0.7 percent to $1,209.36 an ounce after sliding 1 percent the past four trading days. Silver advanced to $16.6056 per ounce while platinum and palladium advanced at least 0.7 percent.

West Texas Intermediate crude was little changed after slipping 0.3 percent on Tuesday. The five-day drop was its longest since the start of August. Brent, the benchmark contract for more than half the world’s oil, added 0.4 percent to $58.90 in London.

Record Supplies

Crude inventories probably rose by 4 million barrels to 429.6 million last week, a Bloomberg News survey showed before the Energy Information Administration report due Wednesday. Industry data showed supplies climbed by 8.9 million barrels.

Petroleo Brasileiro SA’s American depositary receipts fell 1.5 percent in after-hours trading on Tuesday in New York. The Brazilian state-run oil producer’s credit rating was cut to junk by Moody’s Investors Service.

Moody’s kept a negative outlook on the state-controlled oil producer’s rating after cutting it to Ba2, two levels below investment grade, on Tuesday. The two-step downgrade marks the second cut by Moody’s in less than a month for the company, which is embroiled in a widening graft probe.