The dollar stalled on Wednesday as lingering global trade tensions curbed its capacity to bounce back from recent lows.
The dollar index, which measures the greenback versus a group of six major currencies, was 0.1 per cent lower at 89.291 .DXY after gaining about 0.34 per cent overnight, when it managed to pull away from a five-week low of 88.942.
The dollar recovered slightly from the five-week low as concerns of a global trade war were eased by optimistic news that the United States and China were set to begin trade negotiations, after earlier exchanging threats.
The US currency was 0.2 per cent higher at 105.555 yen JPY=.
It had been pushed down from a high near 106.000 reached overnight after a slide in US stocks and Treasury yields, but as fears of a global trade war faded it rebounded from the 16-month low of 104.560 yen set on Monday.
“The dollar lost some traction as equity markets sank following the latest media report on US trade policy,” said Masafumi Yamamoto, chief forex strategist at Mizuho Securities in Tokyo.
According to Reuters, he was referring to a Bloomberg report stating that the Trump administration was considering using a law reserved for national emergencies in a crackdown on some Chinese investments.
“The threat of all-out risk avoidance caused by trade concerns has eased, but some ‘risk off’ moves are likely to keep impacting currencies as long as uncertainties remain,” Yamamoto said.
The euro was 0.05 per cent higher at $1.2411 after losing 0.3 per cent overnight on soft euro zone economic data and dovish-sounding comments from Erkki Liikanen, a member of European Central Bank's Governing Council.
The pound gained 0.15 per cent to $1.4177 after falling 0.5 per cent on Tuesday.
