Comments
The dollar edged higher on Tuesday as some investors judged that its recent decline to a three-year low may be coming to a close amid growing concern over the US stance on global trade. US President Donald Trump imposed import tariffs on washing machines and solar panels, putting a cloud over global trade at a time when its revival has fuelled hopes for a stronger world economy.
Trump is slated to give the closing address at this year's Davos summit of political and business leaders on Friday, and some analysts expect him to strike a protectionist stance on trade, which may spark a selloff in emerging market currencies.
“If Trump decides to strike a strong anti-trade stance, it will spark a selloff in global trade-oriented currencies such as the Korean won and the Chinese yuan and eventually weigh on the US dollar as well,” said Viraj Patel, an FX strategist at ING in London.
In a recent note, Blackrock strategists said the global economy has never been so integrated at this point of an expansion, with world trade making up about 50 per cent of global gross domestic product -- much more than in the last cycle.
The dollar rose 0.2 per cent to 90.52 against a basket of its rivals, still not far from last week's three-year low of 90.11.Relatively high-yielding currencies such as the Australian dollar and the Canadian dollar declined the most against the greenback, falling 0.7 per cent and 0.3 per cent each.
The British pound stood out in early trading, holding its own against the euro after reaching a post-Brexit high of $1.40 in early Asian trading. Elsewhere, the Japanese yen slipped after comments by the Bank of Japan chief quelled speculation the central bank would scale back monetary stimulus.
The yen weakened to 111.15 yen to the dollar, down 0.2 per cent from U.S. levels, after BoJ Governor Haruhiko Kuroda reiterated his commitment to monetary easing.
“I don't see anything in today's announcement that suggests a change in the BOJ's stance. Rather today's price action talks more about how the market is preoccupied with the idea that the BOJ will adjust its monetary policy at some stage in the future,” said Minori Uchida, chief FX analyst at the Bank of Tokyo-Mitsubishi UFJ.
His comments came after US senators struck a deal to lift a three-day government shutdown, which helped the dollar recover some earlier losses. The US House of Representatives passed a short-term measure on Monday to fund the federal government through Febauray 8 after it won enough support in the Senate.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.