Investing.com – The dollar rose against a basket of major currencies as traders took advantage of the cheaper greenback after it fell to a one-month on trade war fears.
The , which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose 0.20% to 89.45 bouncing from a low of 89.00.
President Donald Trump was set to impose about $50 trillion tariff on Chinese imports to penalize China for trade practices that the Trump administration said involve stealing American companies’ intellectual property.
Investors fear the move could spark a tit-for-tat trade war with China, with the latter said to be considering retaliatory measures against US tariffs including imposing tariffs on U.S. semiconductor companies, which have high revenue exposure to China and also agricultural products such as soybeans.
The yen – which has served as the preferred safe-haven proxy during trade-war fears – tacked on gains, pressuring on the dollar as fell to low of Y105.27 but has since recovered some losses to trade at Y105.69.
The dollar’s recovery from one-month lows was stifled somewhat as investors continued to mull the Federal Reserve’s dovish outlook on Wednesday after the central bank raised interest rate but failed to add a fourth rate hike to its projections.
The Federal Reserve Open Market Committee (FOMC) did, however, signal a faster path of rate hikes for 2019 and 2020 but analysts have played down the FOMC’s hawkish outlook on rates.
“Despite the FOMC’s more hawkish path, we continue to expect the Fed to hike 3 times total this year, stopping after the September meeting to assess how much further it is willing to push real rates into positive territory, and facing tighter financial conditions,” Morgan Stanley said.
“After pausing, we look for two additional hikes in 2019, where we think the tightening cycle ends at 2.625%,” the bank added.
Offsetting those headwinds, however, was a fall in to $1.4105, down 0.25%, after the Bank of England left rates unchanged Thursday.
fell 0.25% to $1.2306 while gained 0.03% to C$1.2906 as the latter pair benefitted from a fall in oil prices which weighed on the loonie.
Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Latest posts by investing.com (see all)
- Trump not trying to intervene in currency markets: Mnuchin - July 21, 2018
- Flailing Euro Is Unlikely to Find Any Succor From ECB Meeting - July 20, 2018
- Forex – Dollar Slumps on Trump Trade Comments - July 20, 2018