Forex – Dollar on the Ropes as Mnuchin's Low Dollar Rhetoric Triggers Selloff

© Reuters. – The dollar extended its retreat against a basket of major currencies as Treasury Secretary Steven Mnuchin’s endorsement of a low dollar attracted heavy selling pressure in the greenback.

The , which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell 0.98% to 89.00.

“Obviously a weaker dollar is good for us as it relates to trade and opportunities,” Mnuchin told reporters in Davos, according to Bloomberg.

Also adding to the dollar weakness, was a modest uptick in safe-haven demand amid growing fears of a US-China trade war after Commerce Secretary Wilbur Ross claimed that China’s tech ambitions under its 2025 were a “direct threat” that is being implemented “by disrespect for intellectual property rights” among other “very bad things.”

That sparked a further retreat in the dollar as investors fled to safe-haven yen and Swiss franc.

fell below its 100-day moving average to Y109.11, down 1.11%, while the fell 1.16% to 0.9466.

rose 1.52% to $1.4217 as the pair eyes a test of pre-Brexit vote levels around $1.5. The sharp uptick in the pound came as investors cheered bullish employment data including a uptick in , which stoked expectations for a faster pace of inflation, raising the prospect of an interest rate hike.

, meanwhile, rose 0.89% to $1.2407 and was said to be nearing a test of its 200-month moving average at $1.2412, a day ahead of the ECB meeting Thursday, when many expect the central bank to keep rates unchanged but focus will likely be on ECB president Mario Draghi press conference.

fell 0.63% to C$1.2342.

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