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Dollar rises on fears of new US trade tariffs
THE dollar rose broadly on Wednesday as concerns grew that US President Donald Trump may soon ramp up a trade war with Beijing by imposing tariffs on more Chinese imports.
Trump could impose levies on US$200 billion more of Chinese imports after a public comment period on the new tariffs ends on Thursday, though it is unclear how quickly that will happen.
Investors wary of the deadline stayed loyal to the safe-haven greenback on Wednesday and it rose against major currencies like the euro and the British pound.
The greenback also drew further support from upbeat US indicators underlining the case for further interest rate increases by the Federal Reserve.
The dollar index, which measures the US unit against a basket of six currencies, was up 0.1 per cent at 95.442 as of 1100 GMT, not far off a two-week high of 95.737 reached during the previous session.
This year began with the dollar in retreat and investors convinced of further declines but now there appears to be very little to stop its ascent.
A crisis in the Turkish lira and the US-China trade war have made the dollar a principal haven for investors seeking shelter and President Trump appears to be revelling in the strong dollar and its ability to bring pressure on his foes.
Since Tuesday, the dollar has gained more than 2 per cent against the South African rand and the Argentine peso , and more than 1 per cent against Mexican and Colombian pesos.
The greenback is up in 2018 against every major currency except the Mexican peso and Japanese yen. But some analysts believe the dollar may yet stumble before the year is out.
"Cyclical forces will start to work against the dollar: relative economic momentum, relative monetary policy expectations and relative political uncertainty will start to exhibit similar dynamics that weighed on the dollar in the second half of 2017," said Viraj Patel, currency strategist at ING.
The Australian dollar, which had been languishing at its weakest levels since mid-2016, gained on Wednesday after Australia posted its best economic growth in six years.
It advanced 0.3 per cent to US$0.7196 moving off its lowest level since May 2016, reached during the previous session.
The euro was 0.1 per cent lower at US$1.1597 and the British pound was down 0.2 per cent at US$1.2827. REUTERS