Dollar Down as Trade War Concerns Flare Ahead of CPI
The dollar fell against a basket of major currencies Monday amid fears over the prospect of trade war after President Donald Trump implemented tariffs on steel and aluminium imports.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell 0.12% to 90.00.
In what was quiet day on the economic calendar for top-tier data release, investor focus shifted from the bullish jobs data reported Friday to the potential impact on the U.S. economy of a trade war amid fears that the European Union and Japan could retaliate after expressing reservations about the tariffs.
U.S. Commerce Secretary Wilbur Ross is expected to urge the European Union to lower its trade barriers, U.S. President Donald Trump said on Monday, Reuters reported.
Also weighing on the dollar was a dent in expectations for the Federal Reserve to adjust its rate hike projections from three rate increase this year to four rate hikes amid renewed inflation concerns after wage growth in February rose less than expected.
The U.S. economy created 313,000, well above the 239,000 jobs created in January, according to a report released Friday by the U.S. Department of Labor. Average hourly earnings grew just 0.1% for February, missing expectations for a 0.2% rise.
The lower wage growth has placed more importance on the consumer price index (CPI) data, a measure of inflation, slated for Tuesday.
USD/JPY fell 0.22% to Y106.57, after the yen strengthened amid political uncertainty as Japan Finance Minister Taro Aso is under pressure as reports suggested that Aso’s ministry tampered with documents tied to a land sale.
USD/CAD rose 0.19% to C$1.2835 as a slump in oil prices weighed on the loonie.
GBP/USD rose 0.27% to $1.3891, while EUR/USD rose 0.06% to $1.2315.