Dollar Recovers Some Losses as Germany, Japan Reject Criticism

Updated on
  • Japan’s Asakawa says Trump’s yen comments ‘wide of the mark’
  • Kiwi falls as jobless rate signals central bank may delay hike

Marinov: Trump Confusion Is Not Helping the Dollar

The dollar gained along with Treasury yields, retracing some of its declines on Tuesday, after Germany and Japan rejected accusations from the Trump administration that their currencies were too weak.

The greenback rose versus all its Group-of-10 peers as Japan’s top currency official said the U.S. president’s comments were “wide of the mark.” German Chancellor Angela Merkel rejected the accusation from Trump’s trade adviser Peter Navarra that her country was gaming foreign-exchange markets. The dollar slid Tuesday as markets saw Trump’s comments as a sign he wanted a weaker currency. The Federal Reserve ends a two-day meeting Wednesday.

“Verbal intervention alone is unlikely to orchestrate sustained dollar weakness,” Credit Agricole SA strategists including Manuel Oliveri in London wrote in a research note. “The Fed’s independence implies that the dollar will continue to reflect the cyclical state of the U.S. economy rather than bilateral trade considerations.”

There’s a 15 percent chance the Fed will raise rates Wednesday, and a 46 percent probability it will do so by the end of May, according to data compiled by Bloomberg based on futures. The central bank increased rates in December for the first time in a year.

  • Bloomberg Dollar Spot index climbs 0.2% after dropping Tuesday to the lowest since November; 10-year Treasury yield climbs 2bps to 2.48% after slipping 4bps Tuesday
  • USD/JPY jumps 0.5% to 113.31; clients leaving stops above 113.33 peak seen in New York, according to an Asia-based FX trader
  • NZD/USD slumps as much as 0.7% to 0.7259 as worse-than-expected jobs data spurred speculation RBNZ will hold off tightening; support at 0.7209, Jan. 24 low
  • USD/CAD rises 0.5% to 1.3091; Bank of Canada Governor Poloz says some rise in CAD is premature given excess capacity; adds BOC won’t be following U.S. policy at this stage
  • EUR/USD drops 0.2% at 1.0781 after rising to 1.0812 Tuesday for first time since Dec. 8, briefly topping resistance at 100-DMA
  • USD/CNH climbs 0.2% to 6.8375; onshore yuan remains closed for the Lunar New Year holidays; January factory PMI shows stabilization carried into the new year