The U.S. dollar, on Wednesday, February 8, traded near break-even levels, retreating from an early advance though investors continued to watch the political situation in Europe with caution.
The ICE U.S. dollar index DXY, -0.28% dipped 0.1% to 100.10. The greenback has struggled for direction of late, having dropped 2% thus far this year.
However, it also remains up by 2.2% since the election, with much of that advancing coming in the wake of Donald Trump’s electoral victory in the U.S. The index recently rallied to its highest level since 2002 in early January.
The WSJ Dollar Index BUXX, -0.32% a measure of the dollar against a basket of 16 major currencies, was down 0.3% at 90.48.
The euro EURUSD, +0.1778% traded at $1.0704 from $1.0671 late Tuesday. The British GBPUSD, +0.1679% traded at $1.2540 from $1.2482, MarketWatch reports.
Against its Japanese counterpart, the dollar USDJPY, -0.60% slipped to ¥111.75 from ¥112.45 late Tuesday, a move of about 0.6%.
“There’s a growing sense of concern on the political backdrop as people attach a higher and higher probability to the prospect of something unusual happening in the elections we have coming up this year,” said Adam Cole, head of G-10 FX strategy at RBC Capital Markets.
In addition to the election in France, votes in both Germany and Italy later in the year are seen as potential market-moving events. “Politics is something the market is going to have to keep thinking about,” Cole said.
According to U.S. Commerce Department data released Tuesday, the U.S. posted a $68.9 billion goods trade deficit with Japan in 2016. The country was the second-biggest contributor to the overall U.S. goods trade deficit, after China.