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Dollar Treads Water in Holiday Thinned Trade

7/5/2018, 10:21:21 AMBasics of Trading
Dollar Treads Water in Holiday Thinned Trade

The dollar was treading water against a currency basket on Wednesday in thin trade with U.S. markets closed for the July 4th holiday.

The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was trading at 94.38 by 08:39 AM ET (12:39 GMT).

With U.S. markets shut, investors were turning their attention to what was set to be a busy end to the week, with minutes from the Federal Reserve’s June meeting due out on Thursday and the U.S. employment report for June scheduled for Friday.

Investors remained cautious ahead of Friday’s deadline for the U.S. to impose a 25% tariff on Chinese imports, which Beijing has vowed to match with a levy on U.S. products.

China’s yuan rebounded overnight after China’s central bank pledged to keep the exchange rate “basically stable,” in a bid to calm markets which have been roiled by fears over the fallout of the escalating trade spat between Washington and Beijing.

U.S. President Donald Trump is sticking to plans to penalize major trading partners, including the European Union, Mexico and Canada as part of his 'America First' policy that many investors fear will hit global growth.

The euro was slightly lower, with EUR/USD slipping 0.13% to 1.1642.

In the euro zone, data earlier in the day showed that private sector activity accelerated in June, indicating that the region’s economy regained some traction at the end of the second quarter.

The dollar drifted lower against the yen, with USD/JPY dipping 0.07% to 110.49.

The pound edged higher, with GBP/USD up 0.11% to 1.3209.

Sterling found support after data showing that activity in the UK service sector accelerated at the fastest pace in eight months in June. The report added to signs that the economy rebounded in the second quarter and kept the door open for an August rate hike by the Bank of England.