The dollar rose against most currencies on Wednesday, as optimism over a US-Mexico trade deal gave way to concern that a conflict over trade between Washington and Beijing was not about to end soon. The deadline for public comment on US President Donald Trump's tariffs on another $200 billion of Chinese goods is on Sept. 5, with the new measures possibly taking effect next month.
"There is still a long way to go with Trump recently again threatening tariffs on cars from Europe and the US preparing another $200 billion of tariffs against China," said Craig Erlam, senior market analyst, at OANDA in London.
The U.S currency had dipped to a four-week low overnight as investors unwound safe-haven bets on the currency after the United States and Mexico agreed Monday on overhauls to NAFTA.
But on Wednesday the dollar rose 0.5 percent against the yen to 111.67 yen, after earlier hitting a four-week high.
That said, UBS' global wealth management division sees a long-term downtrend for the dollar versus the yen.
"In the short term, dollar/yen could remain supported at the 110 level or above against a backdrop of broad dollar strength versus major currencies like the euro and the Chinese yuan," UBS said in its latest research note.
"Having said that, we maintain a long yen position in our global...portfolio given the potential for risk aversion to rise on the back of escalating US-China trade tensions, which we believe would benefit the yen as a safe-haven currency," the Swiss bank said.
The dollar was also higher against the Australian and New Zealand dollars, up 0.4 percent and 0.1 percent respectively.
It rose versus the Mexican peso and soared against the South African rand and Turkish lira.
The greenback was supported overall as well by data showing US economic growth was a bit stronger than initially thought in the second quarter, notching its best performance in nearly four years.
Gross domestic product grew at a 4.2 percent annualized rate, the Commerce Department data showed in its second estimate of GDP growth for the second quarter. That was slightly up from the 4.1 percent pace of expansion reported in July.
The data cemented expectations for a US rate hike next month, with a 96 percent probability, according to fed funds futures.
The euro, meanwhile, was flat at $1.1700 after
gaining the last three sessions, as worries mounted that Italy's public deficit could exceed the European Union's ceiling of 3 percent of GDP.
The Canadian dollar rose 0.2 percent versus the US dollar to C$1.2909.
Canada said on Wednesday an agreement to salvage NAFTA is possible by a Friday deadline, but it will be hard work to resolve specific issues as talks with the United States entered a second day.
Comments
Comments are closed.