Forex – U.S. Dollar Hovering Near 2-Year Highs in Risk-Off Trade

© Reuters. – The U.S. dollar was trading within striking distance of two year highs against a currency basket on Thursday in Asia as persistent trade tensions underpinned safe haven demand for the currency.

Investors also remained cautious ahead of revised figured on U.S. first-quarter growth number due later in the day.

The was 98.132 by 1:35AM ET (05:35 GMT), not far from a two-year high of 98.371 reached a week ago. The index is up more than 2% for the year.

“The outlook for global growth, and any drag from the festering trade dispute, remain key issues for markets,” said Michael McCarthy, Sydney-based chief market strategist at CMC Markets, in a note that was cited by Reuters.

“The data over the next twenty-four hours has potential to either confirm or dispel the gloom,” he said.

The pair slipped 0.1% to 6.9088.

Trade tensions remained in focus after Chinese Vice Foreign Minister Zhang Hanhui said on Thursday that provoking trade disputes is “naked economic terrorism,” a couple days after U.S. President Donald Trump said Washington is “not ready for a deal” with China.

The remarks came a day after Chinese newspapers warned that Beijing could use rare earth exports to strike back at the U.S.

The greenback has been the preferred choice of safe-haven currency in times of market turmoil and political tensions this year.

The Japanese yen, another safe-haven, remained relatively weak due to domestic investors’ demand for dollars, analysts said.

“As there’s persistent yen-selling and dollar-buying from Japanese investors when the rate approaches the 109.10 yen per dollar level, it’s not easy for the yen to rise above the 109 level,” said Yukio Ishizuki, senior currency strategist at Daiwa Securities.

The pair last traded at 109.65, up 0.1%.

The pair and the pair both gained 0.2%.

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