US Dollar Rises Against Majors

LONDON, Feb 10 (Reuters) - The dollar hit its highest level in 10 days against the yen ahead of a meeting of the USA and Japanese leaders on Friday, putting it on course for its best week against a basket of major currencies since mid-December.

The dollar was knocked back against the euro and yen this month as Trump focused on protectionist trade policies and appeared to back a weaker dollar since taking office.

Trump finally broke his silence on stimulus measures this Thursday, as he promised on releasing a tax plan that was phenomenal in a meeting at White House with executives of airlines. It was said to rise 0.8% this week, but it still has a long way to touch the 14 year peak of 103.820 it achieved early this January.

The White House said that Trump plans to unveil comprehensive tax reforms in the next few weeks to lower the overall tax burden, which boosted USA stock prices and sent the dollar higher against a basket of currencies.

Earlier in the day, the People's Bank of China lowered the yuan's daily guidance rate by 0.16 per cent or 109 basis points, setting its mid-point rate at 6.8819 per U.S. dollar.

The euro is on track to shed more than 1 percent in a week dominated by perceptions that political risk in the euro zone is growing.

Due to President Trump's statements, US Treasury's yields increased sharply due to which there was a soaring effect of 1.2% in the greenback against yen. Treasury yields had until Thursday declined steadily to multi-week lows, pushing the dollar to a 10-week trough of 111.590 yen. Markets are anxious that Trump could reinforce his position against a strong dollar.

"Currency policy may not be a dominant topic at the summit, and that would be positive for the dollar", Yamada at BOA Merrill Lynch said.

Although manipulation of currency is not at the top of the list of topics Trump would cover at the summit, a senior U.S. official mentioned that it might be covered.

"The summit may be a quick attempt by Japan to deal with pressure from the United States to allow the yen to appreciate", said Makoto Noji, senior strategist at SMBC Nikko Securities.

The dollar index against a basket of major currencies was up another 0.1 percent in morning trade in Europe on Friday, trading as high as 100.87 - its strongest since Jan 30. The AUD/USD was up 0.21% to trade at $0.7638; the NZD/USD was up 0.18% to trade at $0.7199. The Aussie is often used as a liquid proxy for China-related trades.

  • Zachary Reyes