The dollar edged higher against a currency basket on Wednesday in subdued trade amid a lull in an escalating trade dispute between the U.S. and China.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was up 0.13% to 94.78 by 02:47 AM ET (06:47 AM GMT), holding below Friday’s eleven-month high of 95.13.
Fears over trade tensions mounted on Tuesday after Beijing warned that it would retaliate swiftly after U.S. President Donald Trump threatened to impose a 10% tariff on $200 billion of Chinese imports.
The moves exacerbated worries among investors that the world’s two largest economies could descend into an all-out trade war.
Uncertainty over the future of the North American Free Trade Agreement and concerns over tariffs that the Trump administration has imposed on European trading partners also added to investor nerves.
The dollar firmed up against the yen, with USD/JPY inching up to 110.12, pulling away from Tuesday’s more than one-week lows of 109.54.
The Japanese currency is often sought by investors as a safe haven in times of geopolitical tensions and market turmoil.
The traditional safe haven Swiss franc was fractionally lower against the U.S. currency, with USD/CHF edging up to 0.9956.
The euro was a touch lower, with EUR/USD slipping 0.11% to 1.1578 a day after European Central Bank President Mario Draghi reiterated that monetary policy will remain persistent, prudent and patient in the wake of the bank’s dovish guidance on interest rates last week.
Elsewhere, the risk sensitive Australian dollar rebounded, with AUD/USD climbing 0.27% to 0.7399 after reaching a 13-month trough of 0.7369 overnight.
