The dollar rose to the day’s highs against a basket of the other major currencies on Thursday as market sentiment recovered after U.S. President Donald Trump toned down his threats of military action in Syria.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.41% to 89.59 by 09:20 AM ET (13:20 GMT), pulling further away from Wednesday’s two week lows.
In his latest tweet, Trump said that a military strike on Syria after a suspected chemical weapons attack on civilians could come “very soon, or not soon at all.”
Financial markets had slumped on Wednesday after Trump warned Russia of imminent military action in Syria, declaring that missiles “will be coming”.
Rising geopolitical tensions had pulled focus away from fears over a U.S.-China trade war, which had gripped global financial markets in recent weeks.
Trump also denied a report that he had planned to fire U.S. Special Counsel Robert Mueller late last year. Mueller is investigating allegations of Russian meddling in the 2016 U.S. presidential election.
The dollar found support after Wednesday’s minutes of the Federal Reserve’s March meeting showed that officials believe that the economy will continue to firm and that inflation will rise towards their 2% target in the coming months.
Some investors believed the minutes bolstered the case for a faster pace of monetary tightening by the U.S. central bank.
The minutes also showed that officials remained wary about the impact of the Trump administration’s trade and fiscal policies.
The dollar gained ground against the yen, with USD/JPY rising 0.43% to 107.24 after ending the previous session down 0.37%.The safe haven yen is often sought out by investors in time of market turmoil and political tensions.
The euro fell to the day’s lows, with EUR/USD down 0.43% to 1.2314.
Earlier Thursday the minutes of the European Central Bank’s March meeting showed that policymakers are concerned over the risk of a full-blown trade war with the U.S. and the potentially harmful impact of the strong euro.
Meanwhile, the pound edged higher against the U.S. currency, with GBP/USD last at 1.4193.