NEW YORK (Reuters) - The dollar rose on Tuesday, led by gains against the yen and Swiss franc, as risk appetite improved and Wall Street’s main indexes advanced, helping the U.S. currency stabilize after recent declines.
The outlook for the dollar, however, remains murky due to global trade tensions. The greenback has lost 2 percent so far this year.
“At the moment, support from high expectations for further monetary policy tightening from the Federal Reserve has been offset by ongoing political pressures and global trade uncertainties,” Fawad Razaqzada, market analyst at Forex.com in London, said.
China on Sunday announced tariffs on $3 billion in imports of U.S. food and other goods in response to U.S. tariffs on imports of aluminum and steel, a skirmish that investors fear is a prelude to a broader trade war.
The Trump administration is expected to announce this week U.S. tariffs on $50 billion to $60 billion in Chinese imports. On Tuesday, China’s ambassador to the United States said Beijing will take counter-measures of the “same proportion” and scale if Washington imposes further tariffs.
In afternoon trading, the dollar rose 0.2 percent against a basket of currencies to 90.184 .DXY.
Analysts said investors were also focused on U.S. payrolls data and comments by Fed Chairman Jerome Powell at the end of the week, which should help determine the dollar’s direction.
“Within Friday’s jobs data, investors will be focused on wage inflation, with signs of increasing pressure on wages likely to reignite talk of broader inflation and possible four Fed rate increases this year,” said Omer Esiner, chief market analyst, at Commonwealth Foreign Exchange in Washington.
“Such a scenario could help limit the dollar’s losses going forward.”
Also on Tuesday, San Francisco Fed President John Williams was named head of the New York Fed, a move expected to cement the U.S. central bank’s gradual rate-hike policy.
“(Williams) is not going to cause problems with the market. Stability and non-controversial may just be what is needed in these times,” said Carl Kaufman, portfolio manager, at Osterweis Capital Management in San Francisco.
Against the yen, which tends to benefit in times of economic uncertainty, the dollar snapped three days of losses to trade 0.6 percent higher at 106.58 yen JPY=.Traders though are still betting on a stronger yen and a broadly weakened dollar if the trade tensions escalate.
The dollar also advanced versus another safe haven, the Swiss franc, rising 0.4 percent to 0.9592 franc CHF=.
The euro tumbled after a survey showed the euro zone’s manufacturing boom faltered for a third month in March, although output remained robust.
It was last down 0.3 percent at $1.2269 EUR=.
Currency bid prices at 3:24PM (1924 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Euro/Dollar EUR= $1.2271 $1.2300 -0.24% +2.29% +1.2335 +1.2255
Dollar/Yen JPY= 106.5800 105.8800 +0.66% -5.41% +106.6500 +105.7000
Euro/Yen EURJPY= 130.81 130.24 +0.44% -3.23% +130.9100 +130.0000
Dollar/Swiss CHF= 0.9587 0.9552 +0.37% -1.60% +0.9597 +0.9533
Sterling/Dollar GBP= 1.4060 1.4043 +0.12% +4.06% +1.4089 +1.4022
Dollar/Canadian CAD= 1.2796 1.2910 -0.88% +1.74% +1.2923 +1.2781
Australian/Doll AUD= 0.7688 0.7662 +0.34% -1.45% +0.7707 +0.7653
Euro/Swiss EURCHF= 1.1765 1.1750 +0.13% +0.65% +1.1775 +1.1741
Euro/Sterling EURGBP= 0.8726 0.8760 -0.39% -1.77% +0.8764 +0.8714
NZ NZD= 0.7261 0.7211 +0.69% +2.47% +0.7270 +0.7196
Dollar/Norway NOK= 7.8445 7.8868 -0.54% -4.42% +7.8965 +7.8205
Euro/Norway EURNOK= 9.6279 9.7053 -0.80% -2.24% +9.7158 +9.5970
Dollar/Sweden SEK= 8.3926 8.3900 -0.21% +2.33% +8.4158 +8.3582
Euro/Sweden EURSEK= 10.3004 10.3216 -0.21% +4.69% +10.3470 +10.2720
Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Tommy Wilkes in London; Editing by Susan Thomas