After U.S. President-elect Donald Trump stated that the strong dollar was hurting U.S. competitiveness, the dollar decline by 0.6% against a basket of currencies.
In an interview on Monday Trump stated U.S. companies could not compete with China “because our currency is too strong. And it’s killing us”.
In separate statements, a senior adviser to the U.S. President-elect advised about the threat from a stronger dollar.
However, on Wednesday, as investors expected a speech from Fed Reserve Chair Janet Yellen, the greenback made progress, dragging away from seven week low, although the sterling’s decline, giving back some of the prior session strong improvements.
On Tuesday, Sterling rallied after British Prime Minister Theresa May’s Brexit speech, although the U.S. dollar dropped as investors processed remarks by President-elect Donald Trump.
Previously, Sterling had also received an increase after statistics indicating that U.K. inflation hit the highest since mid-2014 in December.
The U.S. dollar index, which gauges the greenback’s strong point compared to a trade-weighted basket of six major currencies, increase 0.25% to 100.52, moved backward from Tuesday’s lows of 100.47, the sluggish since December 8.
Compared to the yen, the greenback was higher, with USD/JPY up 0.51% to 113.17, after declining to a seven-week low of 112.58.
On Tuesday, San Francisco Fed President John Williams called for slow U.S. interest rate hikes within the next few years.
Investors were looking forward to a speech by the Fed chief in San Francisco later on Wednesday, which could propose fresh signals on the direction of monetary policy.
On Tuesday, Fed Governor Lael Brainard stated, the Fed might increase rates more forcefully if deficit expenditure under the Trump administration fueled inflation.
GBP/USD increased 2.66% to 1.2369, recovering from the low of 1.1985 hit on Monday, which was the weakest level since October’s flash crash, after reports said that Prime Minister Theresa May will indicate plans to quit the European Union’s single market to reclaim control of Britain’s borders and laws. It has been the biggest one day increase in the pair since January of 2009, throughout the global financial crisis.
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