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USD/JPY Advances After House Speaker Ryan Urges Trump To Drop Tariffs

3/6/2018, 1:50:44 PMMarket Analysis
USD/JPY Advances After House Speaker Ryan Urges Trump To Drop Tariffs

The dollar rose against a major basket of currencies after House Speaker Paul Ryan urged President Donald Trump to drop his proposed tariffs on aluminium and steel amid worries over the prospect of a trade war.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose 0.04% to 89.99.

"We are extremely worried about the consequences of a trade war and are urging the White House to not advance with this plan. The new tax reform law has boosted the economy and we certainly don't want to jeopardize those gains," said AshLee Strong, a spokeswoman for Ryan, the top Republican in the House.

That came after President Donald said earlier on Monday that his proposal of a 25% tariff on steel imports and 10% tariff on aluminium, announced last week, could be lifted if NAFTA is renegotiated to terms more favourable to the U.S.

Trump said in tweet that tariffs on Steel and Aluminum will only be lifted if “new and fair,” North American Free Trade Agreement (NAFTA) is signed.” He also added that Mexico must “do much more on stopping drugs from pouring into the U.S.”

The yen, which has seemingly served as the favoured safe-haven destination over the past few trading sessions, slipped against the dollar as investor fears over the prospect of a trade war eased somewhat.

USD/JPY rose 0.33% to Y106.10.

EUR/USD, meanwhile, rose 0.09% to $1.2328, after the Italian election resulted in a hung parliament amid big gains for anti-establishment parties, leaving the country facing a prolonged period of political instability.

Offsetting negative sentiment in the region was easing geopolitical in Germany after Angela Merkel secured her fourth term as chancellor after Germany's Social Democrats (SPD) backed a coalition deal with conservative Christian Democratic Union (CDU).

GBP/USD rose 0.33% to $1.3845 amid reports that the UK is nearing an agreement on Brexit transition deal.

USD/CAD rose 0.83% to C$1.2986.