LONDON/NEW YORK :The U.S. dollar strengthened against the Swiss franc and euro but weakened versus the yen on Wednesday as positive sentiment from a new U.S. trade deal was offset by political uncertainty surrounding Japanese Prime Minister Shigeru Ishiba’s future.
President Donald Trump announced a trade deal on Tuesday with Japan, which lowers tariffs on auto imports to 15 per cent in exchange for a $550 billion package of U.S.-bound investment and loans. It is the most significant of a clutch of agreements that Trump has bagged since unveiling sweeping global levies in April.
The dollar gained against the Swiss franc, on track to snap three straight sessions of losses. It was last up 0.24 per cent to 0.79425.
Wall Street’s main indexes were all advancing while U.S. Treasury yields rose.
The greenback weakened against the yen, hitting its lowest level since July 11 at 146.20 per dollar after reports that Ishiba intends to step down next month following a bruising upper house election defeat.
Ishiba denied the reports that he had decided to resign, calling them “completely unfounded.” The yen was last down 0.06 per cent at 146.565 yen.
“The main thing driving USD/JPY has to do with political anxiety as it looks like the prime minister is feeling some pressure to consider resigning,” Juan Perez, senior director of trading at Monex USA in Washington, told Reuters in a statement.
“This deal helps automakers, for now, but leaves markets also wondering if at any point tariffs can be increased since they will not go away as tools for negotiating anything and everything. Japan, an advanced economy agreeing to new terms for trade does leave concern that successful tariff use will give incentive to keep using their threat.”
The European Union and the U.S. are heading towards a trade deal that would result in a broad tariff of 15 per cent on EU goods imported into the U.S., two diplomats told Reuters. The deal would mirror a similar agreement the U.S. struck with Japan.
The euro pared earlier losses and was up 0.08 per cent against the dollar at $1.176250,.
The U.S. dollar has been one of the biggest losers among major currencies since Trump announced sweeping tariffs on trading partners on April 2. The weakness continued as those duties were suspended to allow further negotiations, but has steadied this month.
The August 1 deadline for tariff deals still looms for many countries and investors remain cautious on how it will play out.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.14 per cent to 97.33, on track for four straight sessions of losses.
“I think what the market is expecting is that there will be a blanket tariff of a certain amount: let’s just say 10 per cent or so, and that has been set in place for quite a while. And I believe that it’s discounted,” said Jeff Young, head of investment strategy, at PGIM Quantitative Solutions in New Jersey.
“The effect on the dollar is going to be … folded into the overall macro picture. And I think it’s going to be difficult to disentangle the exact impact of the tariff versus all the other things that are affecting the currency because I do think that a lot of that is pretty much already discounted.”
Sterling was up 0.26 per cent at $1.35690.
The Aussie hit an eight-month high and was last up 0.4 per cent at U.S.$0.6584.
Currency
bid
prices
at 23
July
05:27
p.m. GMT
Descript RIC Last U.S. Pct YTD High Low
ion Close Chang Pct Bid Bid
Previous e
Session
Dollar 97.272 97.462 -0.18 -10.34 97.612 97.
index per cent per cent 272
Euro/Dol 1.1763 1.1755 0.06 per cent 13.61 per cent $1.176 $1.
lar 5 171
1
Dollar/Y 146.48 146.645 -0.08 -6.88 per cent 147.21 146
en per cent 5 .15
Euro/Yen 172.36 172.33 0.02 per cent 5.6 per cent 172.74 171
.38
Dollar/S 0.7938 0.7924 0.22 per cent -12.5 per cent 0.7949 0.7
wiss 913
Sterling 1.3567 1.3534 0.26 per cent 8.49 per cent $1.357 $1.
/Dollar 7 351
7
Dollar/C 1.3612 1.3605 0.07 per cent -5.32 per cent 1.3628 1.3
anadian 576
Aussie/D 0.6587 0.6556 0.48 per cent 6.45 per cent $0.660 $0.
ollar 1 655
1
Euro/Swi 0.9338 0.931 0.3 per cent -0.62 per cent 0.9339 0.9
ss 294
Euro/Ste 0.8667 0.8683 -0.18 4.76 per cent 0.8687 0.8
rling per cent 648
NZ 0.6035 0.6003 0.52 per cent 7.84 per cent $0.604 0.5
Dollar/D 7 997
ollar
Dollar/N 10.1092 10.067 0.42 per cent -11.06 10.127 10.
orway per cent 053
5
Euro/Nor 11.8906 11.8338 0.48 per cent 1.03 per cent 11.897 11.
way 803
Dollar/S 9.509 9.5065 0.03 per cent -13.69 9.5357 9.4
weden per cent 766
Euro/Swe 11.1863 11.1749 0.1 per cent -2.45 per cent 11.196 11.
den 5 129
