Dollar Treads Water As Trade Fears Cap Bounce From 2-Week Low
The dollar held steady against a basket of currencies on Wednesday. The currency’s earlier bounce from two-week lows flagged amid lingering trade conflict concerns.
The Dollar Index against a basket of six major currencies was steady at 94.652 after gaining 0.4 percent overnight to snap a four-session losing run.
While a modest easing in concerns over an escalating trade row between the United States and its trade partners had lifted the dollar off a two-week trough of 94.171, wariness lingered and capped the dollar.
Underlining investor caution, equity markets in Asia extended losses and slipped across the board on Wednesday.
“The spat is beginning to have an actual impact on corporate behavior and this is the difference from the earlier stages of the trade row,” said Koji Fukaya, president at FPG Securities in Tokyo.
“The ‘risk off’ trend has started to impact corporations in the developed markets, clouding the outlook for their economies and suppressing dollar demand.”
The Dollar was 0.1 percent lower at 109.92 yen, after going as high as 110.23 on Tuesday. The yen is often sought in times of market turmoil and political tensions.
“The dollar lacks guidance from U.S. yields, which have been directionless. Furthermore, it is difficult to gauge whether the Trump administration is poised to become even more conservative towards trade issues or if it wants to ease its stance,” said Masafumi Yamamoto, chief forex strategist at Mizuho Securities in Tokyo.
The 10-year U.S. Treasury note yield was unchanged at 2.882 percent. The yield has been confined in June to a 15 basis point range after fluctuating by nearly 40 basis points in May, during which it touched a seven-year high of 3.128 percent.
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