The U.S. dollar regained some ground on Wednesday, retracing some of its declines on Tuesday after Germany and Japan rejected accusations from the Trump’s administration.
US President and his trade adviser accused Germany, Japan and China of exploiting currencies to gain a trade advantage over the US. The US Dollar Index, which measures the greenback against a basket of six major currencies, fell 2.6 in January which represents its worst performance for the first month of the year since 1987.
Strong U.S. jobs and factory data
The dollar rose as much as 1 percent against the yen after the ADP National Employment Report showed U.S. private employers added 246,000 jobs in January. Additional factor that influenced the dollar’s value is the Institute for Supply Management, that unveiled its index of national factory activity rose to 56.
The dollar hit a session high of 113.95 yen a day after falling to 112.04 yen, while the euro sank more than 0.5 percent to a session low of $1.0737.
“ADP just served as a reminder of America’s rosier fundamentals, something that has been pushed off to the side with Washington dominating the spotlight,” said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.
One thing that could trigger fresh dollar strenght is an indication from the US Federal Reserve that it plans to raise interest rates imminently.
After two-day meeting, the Federal Reserve left interest rates unchanged and struck a cautios tone about its rate-hike expectations.
“Donald Trump’s executive orders have shaken the Fed and they do not want to increase rates as aggressively as previously thought. The unanimous decision by the Fed has made it clear that March meeting may not have much life in that at all,” said Naeem Aslam, chief market analyst at ThinkForex.
In a statement issued after its latest policy meeting, the Fed unveiled it needs more time to monitor the economy and still envisions a gradual pace of rate increases.