The U.S. dollar was little changed against other major currencies on Tuesday, hovering close to a one-week trough as traders were still digested last week’s news of possible U.S. tariffs on steel and aluminum imports.
Investors remained cautious as U.S. President Donald Trump faced growing pressure to pull back from proposed steel and aluminium tariffs.
Trump reacted by stepping up pressure on Mexico and Canada, saying he would lift planned tariffs on steel imports if they signed a new version of the North American Free Trade Agreement, or NAFTA.
The tariffs, announced last week, had sparked concerns over a potential trade war, which would have a negative impact on the U.S. economy.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was little changed at 89.92 by 05:15 a.m. ET (09:15 GMT).
The euro and the pound were steady, with EUR/USD at 1.2341 and with GBP/USD at 1.3847.
Sentiment on the euro remained vulnerable amid concerns over Sunday’s inconclusive Italian election results.
With no party winning an outright majority, Italy is likely to be plunged into a period of political instability, which could stall progress on economic reforms in the euro zone’s third-largest economy.
Elsewhere, the yen was stronger, with USD/JPY down 0.21% at 105.99, while USD/CHF held steady at 0.9399.
The yen showed little reaction after Bank of Japan Governor Haruhiko Kuroda saidthere were downside risks to the central bank’s projection that inflation would reach its 2% target by fiscal year 2020.
The Japanese currency had risen late last week after Kuroda said the BoJ would discuss an exit from monetary easing if it met its inflation target.
The Australian dollar was almost unchanged, with AUD/USD at 0.7759, while NZD/USD rose 0.22% to 0.7241.
Earlier Tuesday, the Reserve Bank of Australian left interest rates at record lows and sounded less confident that the economy would grow at 3% or more this year, dampening prospects for rate hikes in the coming months.
Meanwhile, USD/CAD edged 0.13% higher to trade at 1.2986.