Dollar Slips as Investor Confidence Returns
The dollar’s momentum from Friday eased in morning trade in Asia Monday, with the US dollar index struggling to remain above the 90 handle amid news that North Korea might hold talks with the U.S. and halt nuclear testing helped boost market confidence while a U.S. plan to institute tariffs on steel and aluminum moved forward but narrower than expected.
The U.S. dollar index that tracks the greenback against a basket of six major currencies slipped 0.011% to 90.01 at 9:21pm ET. The dollar plunged last week to as low as 89.41 but rose again after signs of a global trade war initiated by U.S. president Trump’s tariff plan on imported steel and aluminum receded. Trump exempted North American partners Canada and Mexico from the tariffs and left the doors open for other allies to be exempted as well.
The news regarding a wider exemption for the tariffs added to discussions between the U.S. and North Korea of a potential high-level meeting between Trump and North Korean leader Kim Jong-un, which boosted investors’ confidence in the greenback.
The dollar traded 0.18% lower against the yen at 106.60. The USD/JPY pair was trading around the 106 range in the morning Monday from the 105 last week on the back of a stronger dollar supported by improved market sentiment.
Meanwhile, the AUD/USD pair traded 0.36% lower at 0.7801. The Aussie got a lift from the news over the weekend that Australia would also be exempt from Trump’s tariff plan on imported steel and aluminum. Australia’s Prime Minister Malcolm Turnbull confirmed the news.
Elsewhere, The People’s Bank of China set the fix rate of yuan against the dollar at 6.3333 versus Friday’s 6.3451. The USD/CNY pair was quoted at 6.3276, up 0.29%. China confirmed to scrap the two-term limit on the constitution over the weekend, implying that chairman Xi Jinping can rule beyond 2024.