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The dollar traded on steady grounds on Wednesday, maintaining composure despite US President Donald Trump’s State of the Union address, which touched upon trade and budget matters, but left investors with some surprises.

Against a basket of six major currencies, the US dollar index rose 0.08 percent to $95.898, after almost hitting a two-week high of $96.135.

Senior Market Economist Ayako Sera said Trump’s address did not contain surprises, as he did not, for example, declare a state of emergency (over border funding) nor make surprising comments about China.

During his annual speech on Tuesday, Trump reiterated his promise to put up a border wall to address illegal immigration which he described as an urgent national crisis.

Trump also stated that any trade deal with China must include real, structural change to end unfair trade practices, reduce their chronic trade deficit, and protect American jobs.

The greenback has also been able to maintain its position despite US Treasury yields sliding on Tuesday and withdrawing from one-week highs.

The dollar is managing to draw support in spite of lower Treasury yields thanks to a combination of dovish-sounding Federal Reserve and US data, which has been relatively strong on the whole recently, according to Chief Japan FX and Equity Strategist Shusuke Yamada.

The US 10-year Treasury yield last stood at 2.689 on Wednesday.

Rate Outlook Change Sends Aussie Down

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Gaining more attention was the one-week low hit of the Australian dollar.

The Aussie fell nearly 1.3 percent to 0.71435 on Wednesday, setting it on course for its highest intraday loss in more than five months, after the Reserve Bank of Australia (RBA) Governor Philip Lowe signaled a possible rate reduction after more than a year of suggesting tighter future policy.

The currency was last down by 1.3 percent to 0.7134 against its US counterpart.

In first public speech of the year, Lowe said the central bank remained confident about the local economic outlook, although warned that interest rates might decline if unemployment climbs and inflation stayed too low.

Over the past year, the next-move-is-up scenarios were more likely than the next-move-is-down scenarios, Lowe stated, adding that today, the probabilities appear to be more evenly balanced.

Melbourne-based Head of Research Chris Weston said Lowe’s comments showed the RBA will take action when necessary, but the bar to cutting rates is still quite high.

The central bank kept its official cash rate at a record low of 1.50 percent since August 2016 and constantly underlined the next move was more likely to be up.

Against the yen, the greenback fell 0.2 percent to 109.70 after gaining 0.4 percent overnight.

While the safe-haven currency’s optimism against the struggling Aussie was seen as a factor pressuring the dollar/yen pair, the US dollar stayed near a five-week-peak of 110.165 yen registered on Monday.

The Australian dollar shrunk by 1.6 percent to 78.28 against the yen on Wednesday.

Meanwhile, the euro slipped 0.1 percent to 1.1395 against the US dollar, having shed 0.25 percent on Tuesday to its lowest since January 28.

The single currency weakened after survey released the previous day showed business growth in the euro zone expanded at their slowest since mid-2013 at the beginning of 2019.

The British pound gained 0.1 percent to 1.2959 against the greenback after hitting its lowest since January 22 of 1.2923.

The sterling had fallen nearly 0.7 percent the previous day due to disappointing Purchasing Managers’ Index (PMI) data and uncertainty surrounding Brexit negotiations.

A British newspaper reported on Tuesday that UK cabinet ministers have held secret discussions on plans to delay Brexit by eight weeks. The holdup would move UK’s departure from the European Union from March 29 to May 24.

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