Forex – Dollar Broadly Lower as Trade Fears Weigh


© Reuters. Dollar broadly lower as trade fears weigh

Investing.com – The dollar moved lower against a currency basket Wednesday after the U.S. and China took another step closer to a trade war that investors fear could deal a blow to the global economy.

The , which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.18% to 89.69 by 10:45 AM ET (14:45 GMT).

Fears over the prospect of an all-out trade war escalated after China on Wednesday announced on U.S. imports, in retaliation in retaliation to U.S. President Donald Trump’s new tariffs on its exports.

China’s commerce ministry announced reciprocal 25% tariffs on $50 billion of U.S. goods, including soybeans, planes and autos. The effective date will depend on when the U.S. action takes effect.

The move comes one day after the pushed ahead with plans to slap tariffs on about $50 billion of annual imports from China in an attempt to force changes in Beijing’s intellectual property practices.

The dollar showed little reaction to data showing that the added 241,000 jobs in March, well above economists’ forecasts.

The report comes ahead of the more comprehensive government nonfarm payrolls report, as well as comments by Federal Reserve Chairman Jerome Powell on Friday that could help determine the direction of the dollar.

Signs of increasing wage growth could underline the case for the Fed to raise interest rates at a faster pace. Expectations of rising rates tend to boost the dollar by making the currency more attractive to yield-seeking investors.

Separate reports showed that U.S. factory orders rebounded in February, while the rate of growth in the economy’s service sector slowed in March.

Against the yen the dollar was lower, with down 0.33% at 106.25, not far from the day’s low of 105.98.

The Japanese yen, typically viewed as a safe-haven currency, tends to be sought out by investors during times of political or economic uncertainty.

The euro moved higher against the softer dollar, with rising 0.26% to 1.2302, but gains were held in check as investors stuck to the sidelines amid broad-based risk aversion.

In the euro zone, data on Wednesday showed that picked up to 1.4% in March, keeping the European Central Bank on track to scale back its massive stimulus program in the coming months.

The pound was also slightly higher against the dollar, with adding on 0.16% to trade at 1.4078.

Sterling came under pressure earlier after a report showing that activity in the UK construction sector slowed sharply in March, hit by unseasonably cold weather.

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