US dollar steadies ahead of Trump inauguration, euro rebounds

[TOKYO] The US dollar held its gains on Friday as investors braced for US President-elect Donald Trump to be sworn in, while the euro rebounded as the European Central Bank held policy steady.

The US dollar index, which tracks the greenback against six major currencies, last stood at 101.17.

The index rose to 101.73 on Thursday on upbeat US job and housing data, with homebuilding having rebounded sharply in December as a firming economy boosted demand for rental housing.

The number of Americans filing for unemployment dropped unexpectedly to near the lowest levels in decades.

Investors are now awaiting the inauguration of Mr Trump later on Friday for catalysts. Mr Trump will be sworn in as the 45th president of the United States.

"The dollar could fall if Trump pushes forward his protectionist rhetoric in his inauguration speech," said Minori Uchida, chief FX analyst at Bank of Tokyo Mitsubishi UFJ.

"Some investors also expect more details on his policies, so the dollar could also slip if Trump does not mention any specifics."

The euro rebounded the previous day as the European Central Bank announced it would maintain its negative interest rate policy and continue its record pace of asset purchases to stimulate tepid growth.

The common currency had briefly dropped during the press conference of ECB chief Mario Draghi, who pointed to sagging inflation and the need for further monetary policy stimulus in Europe.

The euro slipped to US$1.0589 during Mr Draghi's speech on Thursday, then rebounded as he noted no policy changes. The euro last stood at US$1.0659.

The US dollar held gains against the yen and was last steady at 114.875. The greenback moved to a one-week high of 115.63 yen on Thursday, helped by the strong US data and resulting rise in Treasury yields.

For immediate cues, Asian markets are waiting on a burst of China's data, including GDP, due later in the day. China is expected to report that its economy grew by a steady 6.7 per cent in the fourth quarter, giving it a solid tailwind heading into a turbulent 2017.

The world's second-largest economy faces increased uncertainties from a cooling housing market and the government's bid to push through painful structural reforms.

REUTERS