Yen down in Asia due Trump’s nuclear tweet
The dollar gained pace against the yen in Asia on Friday in a volatile trading day as a tweet by President-elect Donald Trump criticizing Japan’s top automaker sparked concerns of a trade row with the top U.S. ally in Asia and the yuan showing renewed strength led by central bank intervention.
“Toyota Motor said will build a new plant in Baja, Mexico, to build Corolla cars for U.S. NO WAY! Build plant in U.S. or pay big border tax,” Trump said on Twitter. USD/JPY changed hands 115.79, up 0.37%, while AUD/USD was mostly flat at 0.7336. Nonfarm payrolls data from the U.S. later Friday is expected to set the tone for the dollar.
In Australia, the trade balance showed a surplus of A$1.243 billion, wider thant he deficit of A$500 million expected.
The People’s Bank of China set the yuan central parity rate against the U.S. dollar stronger at 6.8668 Friday compared with 6.9307 set on Thursday, marking the second rise in a row after the eight year low it set Wednesday. The offshore yuan has jumped as high as 6.7850 against the dollar as the central bank via state-owned bank proxies has stepped into both its onshore and offshore yuan markets to shore up the faltering yuan this week.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last quoted up 0.30 to 101.69.
Overnight, the U.S. dollar was lower against a basket of the other major currencies on Thursday after Federal Reserve minutes that pointed to uncertainty over the potential impact of the incoming Trump administration’s policies on the economy.
The index hit 14-year peaks on Tuesday as strong U.S. factory data fed into expectations for a faster pace of monetary tightening in 2017.
But the greenback came under pressure after Wednesday’s minutes from the Fed’s December 13-14 meeting showed that officials noted “considerable uncertainty” over the policy direction of President-elect Donald Trump’s incoming administration.
Trump will take office on January 20 and has yet to outline his economic policies in detail.
The minutes also showed the recent appreciation in the dollar could lead to a slower pace of rate hikes.
The Fed noted that “a further strengthening in the dollar could lead to tighter financial conditions that restrain economic activity and inflation—a key downside risk.”
U.S. data on Thursday showed that initial jobless claims fell by 27,500 to 235,000, an almost 43 year low.
Another report showed that the U.S. private sector added 153,000 jobs in December, below expectations for a gain of 170,000.
Analysts were looking ahead to Friday’s U.S. non-farm payrolls report for December for indications on solid growth in the labor market which could enable the Fed to keep pushing up interest rates.
Higher rates typically boost the dollar by making dollar assets more attractive to yield-seeking investors.