The dollar inched higher against the yen on Wednesday but was steady against the basket of currencies used to measure its broader strength as investors awaited U.S. President-elect Donald Trump’s first formal news conference.
The dollar has gained broadly since Trump’s victory in November as investors bet he would boost public spending and spur repatriation of overseas funds by U.S. companies, policies expected to bring higher inflation and interest rates, reports Reuters.
But more doubts have emerged in recent weeks about that narrative, and investors will have a close eye on what the new president says about trade and relations with China.
“Overall we’re still constructive but it does look more a case of playing the end of the rally before we see a correction later this year.”
The dollar index was roughly steady at 102.04, in the middle of a range it has held for the past week and off a 14-year peak of 103.82 hit on Jan. 3 . .DXY Against the yen, it rose 0.1 percent to 115.92 yen, nearly 3 percent off almost one-year highs hit in December.
The euro was steady at $1.0556 EUR= after brushing a 10-day high of $1.0628 overnight.
Trump’s news conference is due to start at around 11:00 EST (1600 GMT).
“The less market positioning friendly policies (are) a strong focus on trade tariffs or perhaps more importantly if he talks about a weaker dollar policy,” Nomura analyst Jordan Rochester wrote in a note for clients.
“We wouldn’t be surprised to see 113.50 to 114 yen over coming weeks if he moves in this policy direction so soon. If he directly comments on a weaker dollar policy, the adjustment could be more (like) 110 to 112 in coming weeks.”
