The dollar fell to a fresh three-year low against a basket of major currencies on Wednesday, January 24, after the U.S. Treasury secretary said he welcomed weakness in the currency, and as investors worried about U.S. President Donald Trump’s protectionist agenda.
The dollar index .DXY, which measures the greenback against a basket of six major currencies, was down 0.93 at 89.283, slipping below 90 for the first time since December 2014. The dollar was down about 1 percent against the yen JPY=.
The dollar has pressured for months by the view that the Federal Reserve is no longer the only game in town when it comes to tighter monetary policy as growth in other regions, Europe in particular, picks up speed.
Speaking at the World Economic Forum in Davos on the eve of Trump’s arrival at the Swiss resort, Treasury Secretary Steven Mnuchin said the weaker dollar was positive for U.S. trade.
The dollar touched a four-month low against the yen on simmering concerns that the U.S. currency’s yield advantage will start to erode as major central banks head toward unwinding
their massive stimulus.
Against the yen , the dollar fell below the 110 threshold for the first time in four months. The dollar index fell to its lowest since Dec. 31, 2014, on a fresh burst of speculative selling.
A weaker dollar makes bullion more attractive for holders of other currencies.
The dollar had on Tuesday leaped as some investors judged that its recent decline to a three-year low may be coming to a close amid growing concern over the U.S. stance on global trade.
U.S. President Donald Trump imposed import tariffs on washing machines and solar panels, putting a cloud over global trade at a time when its revival has fueled hopes for a stronger world economy.
Trump is slated to give the closing address at this year’s Davos summit of political and business leaders on Friday, and some analysts expect him to strike a protectionist stance on trade, which may spark a selloff in emerging market currencies.
