Dollar Remains Weak Despite Unlikely Trade War
The dollar continued to stay weak although a global trade war initiated by Trump’s harsh tariff plan becomes less likely.
The US dollar index that tracks the greenback against a basket of six major currencies last stood 0.04% lower at 89.92 at 12am ET. The greenback dropped below the 90 handle overnight in Asia and remained below the line in the morning.
Despite U.S. President Donald Trump’s strong remark that no country can be exempt from the tariffs on steel and aluminum imports, investors tend not to see it translate into policy as both Republicans and Democrats oppose the plan, cooling down fears of a global trade war.
The USD/JPY pair edged 0.08% higher at 106.29, as the receding fear of a trade war prompted investors back to taking risks. The higher treasury yields and strong equity prices in the US put pressure on the anti-risk yen.
Focus in Japan this week will be on the Q4 GDP data due Thursday as well as the monetary policy statement from The Bank of Japan and nonfarm payrolls on Friday, although the statement should come nothing too surprising as the Bank confirmed to maintain its monetary policy.
The AUD/USD pair was quoted at 0.7773, up 0.13%. Australia’s January retail sales rebounded more slowly than expected at 0.1% m/m versus the expected 0.4% m/m. Its current account deficit also widened to AUD $14 billion in fourth quarter. The Reserve Bank of Australia is expected to keep its 1.5% interest rate even though it is lagging behind its Asian peers. The Bank’s rate statement released today said low rates continued to support Australian economy.
Elsewhere, The People’s Bank of China set the fix rate of yuan against the dollar at 6.3386 versus yesterday’s rate of 6.3431. The USD/CNY pair traded at 6.3395, down 0.12%.