The dollar soared against a basket of major currencies on Wednesday, January 11, adding 0.2 percent to 102.18.
This surge is coming ahead of a news conference by U.S. President-elect Donald Trump in which he is expected to spell out more about his plans for the economy.
The dollar rally sparked by Trump’s surprise victory in the November election has shown signs of fading, as the index has gone from a 14-year peak of 103.82 scaled on Jan. 3 to a low of 101.30 over the past week.
The dollar firmed 0.3 percent to 116.100 yen. It had suffered two days of losses against the safe-haven Japanese currency.
Currency pairs settled into a narrow range ahead of Trump’s news conference – his first since the election – which is due to start at around 11:00 EST (1600 GMT) neared.
“The dollar is set to resume the Trump rally if he provides specifics of stimulus measures, notably those related to tax cuts, which appear achievable,” said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo.
“On the other hand, the market is also focused on potential risk factors, like Trump taking a tough stance against China. That could prompt the dollar to fall against the yen.”
Elsewhere in the markets, sterling dipped 0.1 percent to $1.2168 to inch back towards a two-month low of $1.2107 set overnight. Worries about the terms of Britain’s departure from the European Union have kept the currency under heavy pressure this week.
The Australian dollar was flat at $0.7372 after popping up to $0.7385 overnight, its highest since mid-December. The U.S. dollar’s stall this week and rise in iron ore and coal prices have shored up the Aussie this week.
The New Zealand dollar held steady at $0.6987, after touching a four-week high of $0.7048 on Tuesday.
