The dollar rose to a 2-week high against a basket of currencies on Monday, after the meeting between U.S. president Donald Trump and Japanese Prime Minister Shinzo Abe.
A senior Japanese government spokesman unveiled that Abe and Trump did not discuss currency issues and that Trump did not request a bilateral trade deal.
The dollar surged 0.6 percent against the yen to 113.90 yen, extending its recovery from 111.59 yen touched last Tuesday.
Wall Street has been carefully watching Trump’s meetings with foreign leaders for signs of tension, due to recent actions that suggest that he will take a protectionist stance on trade policy.
“It’s been a surprisingly good few days for those that were concerned about the relationship between the U.S. under Trump and two of Asia’s powerhouses: China and Japan,” said Craig Erlam, senior market analyst at OANDA.
The dollar remained unchanged against Canadian and Australian dollar, and edged 0.10 percent and 0.15 percent higher against the euro and the Swiss franc, trading at 0.9403 euro cents and CHF1.0039.
All eyes are now on Fed Chairwoman Janet Yellen, who will speak before the Senate Banking committee on Tuesday and the House Financial Services Committee on Wednesday.
Pound starts week with solid footing
The pound has done well to defend itself against the larger greenback which has been ticking higher against most major competitors since President Donald Trump said he was looking to announce some tax changes in coming weeks. The Pound to Dollar exchange rate edged to 1.2519, up 0.52% on a day-to-day basis on Monday, February 13.
“USD buying, particularly among leveraged investors, has emerged after six weeks of selling. ‘Buy USD’ is also a signal that our algorithm holds. This indicates to us the sensitivity of markets to positive news on tax reform,” said Richard Cochinos at CitiFX.
So while the Pound is arguably undervalued it does remain subject to Brexit-related uncertainty which leaves it exposed to any major push higher by the broader US Dollar.