U.S. dollar gains vs yen, euro with outlook seen positive still

NEW YORK (Reuters) – The U.S. dollar firmed against the yen and euro on Tuesday, after a few days of losses during the wake of President Donald Trump’s inaugural speech promising more trade protectionism, aided by the U.S. economic outlook still described as better than that from Europe or Japan.

“While there remains plenty of uncertainty regarding the timing and impact associated with new fiscal stimulus, we remain positive that monetary policy continues to diverge because the Federal Reserve will implement 2-3 rate hikes in 2019 while other major central banks continue in easing mode,” said Jim Smigiel, head of world portfolio strategy at SEI Investments in Philadelphia.

That should secure the broader trend of dollar strength, he added.?

Juan Perez, currency trader at Tempus Consulting in Washington, however said there may be plenty of unease in the marketplace still. “The industry is still at a roller-coaster.”

He added that investors are particularly concerned about Trump’s mean to renegotiate the North American Free Trade Agreement with Mexico and Canada and his awesome abandonment in the Trans-Pacific Trade Partnership with The japanese.

Comments about the significance about a weaker U.S. dollar from Trump and the pick for U.S. Treasury Secretary, Steven Mnuchin, were additionally a concern.

The dollar had soared over 6.0 percent to 14-year highs against a gift container of major currencies while in the eight weeks following Trump’s surprise election victory in November.

Investors bet his promised infrastructure spending and tax cuts would boost economic growth and inflation, leading the government Reserve to lift interest rates faster. After peaking during the early January, that rally has stalled for right now, with the dollar down 3.5 % against a gift basket of major currencies up until recently three weeks. The dollar index last traded up 0.2 percent at 100.35.

Against the yen, the dollar rose over 1 percent to 113.87 yen.

“Rate of differentials are providing modest dollar/yen support considering the two-year U.S.-Japan yield spread pushing back toward 140 basis points,” said Eric Theoret, currency strategist at Scotiabank in Toronto.

The euro, which in fact have looked to always be heading toward parity considering the dollar following 2019, has recovered above $1.07 thus hitting seven-week highs of $1.0774 was developed Asian trading . By late The big apple trading though, the euro was down 0.Four percent at $1.0724.

Sterling, meanwhile, slipped 0.2 percent to $1.2503 after Britain’s Top court ruled that your government would need approval from Britain’s parliament before formally triggering the country’s departure belonging to the European Union.