The US dollar gained strength against most of its major trading partners early Wednesday, except for a slight dip against the Japanese yen. This movement came ahead of the release of key economic data, including housing starts for January and the New York Federal Reserve’s services index reading for February.
Market analysts noted that the dollar had been rebounding from recent losses, but early trading showed some strength in the yen and currencies from Australia and New Zealand. Investors are also closely monitoring geopolitical developments, particularly discussions between Russia and the United States regarding the Ukraine conflict. These negotiations have excluded both Ukraine and the European Union, raising concerns about Europe’s economic and defense position. If the US and Russia reach a separate agreement, it could lead to a shift away from European currencies and increase demand for safe-haven assets like the US dollar and Japanese yen.
Adding to market volatility, former US President Donald Trump recently suggested imposing a 25% tariff on imported cars, pharmaceuticals, and computer chips. This has created uncertainty in global markets, affecting currency values.
Looking at the latest foreign exchange rates:
- EUR/USD dropped to 1.0424 from 1.0447, even as the Eurozone’s current account surplus widened in December. The next European Central Bank meeting is scheduled for March 5-6.
- GBP/USD fell to 1.2581 from 1.2607. UK consumer prices declined in January, but the annual inflation rate increased. The Bank of England will meet on March 20 to discuss monetary policy.
- USD/JPY declined to 151.7863 from 152.0351. Japan’s business sentiment slightly improved, but its trade deficit widened in January. The Bank of Japan will hold its next meeting on March 18-19.
- USD/CAD rose to 1.4213 from 1.4189, with no major Canadian economic reports scheduled for the day. The Bank of Canada’s next meeting is set for March 12.
Market participants are now focused on the upcoming Federal Reserve meeting minutes, which could provide insight into future interest rate decisions. Federal Reserve Vice Chair Philip Jefferson is also expected to make a speech that could impact market expectations.
