Forex Factory: Dollar Edges Down Amid Trade Tensions
The dollar index, which measures the US currency against six major peers, fell to 98.58, the lowest since late April, due to trade uncertainty and signs of fragility in the US economy. The decline was attributed to trade uncertainty, with US duties on imported steel and aluminum set to double to 50% starting on Wednesday.
The US dollar traded flat against major currencies on Wednesday, with the dollar index little changed at 99.194, as investors awaited trade talks between the US and China, and key economic data releases, including the US jobs data.
The dollar edged down 0.09% to 143.82 yen on Wednesday, while the euro was up 0.13% at $1.1385, ahead of the European Central Bank's interest rate decision. The market is looking ahead to US employment data for immediate trading cues, while waiting on developments in President Donald Trump's tariff negotiations with key trading partners, including China.
The Trump administration has given a deadline for countries to submit their best offers on trade, coinciding with a doubling of duties to 50% on imported steel and aluminium. Traders will have an eye on the ADP employment report later in the day, in the run-up to crucial US monthly payrolls figures on Friday. The US dollar touched a six-week low on Tuesday due to signs of fragility in the US economy caused by the ongoing trade war.
The focus now turns to US factory order numbers and jobs figures due later in the week, as investors watch for signs of economic growth and developments in the US-China trade talks. The US Treasury Secretary said Trump and Chinese President Xi Jinping were likely to have a call soon to iron out trade differences, which may provide some respite to the dollar.