The dollar edged higher against the yen on Monday, though the gains were subdued due to lurking trade war concerns between the US and China. Friday’s US job reports were weaker than expected.
The US dollar and Japanese yen changed hands at 107.10, 0.17 percent higher after Friday’s close where it was down 0.42 percent.
The Japanese yen is considered a safe haven among investors who want to avoid geopolitical conflicts and economic disputes. Meanwhile, the dollar slipped last Friday due to weakened employment data.
China has said that it could respond “forcefully” if US President Donald Trump actually imposes $100 billion worth of additional tariffs on imports.
There are also looming concerns over a full blown trade war sparked by growing protectionist trade policies. Such dispute could have negative impacts on the global economy and US growth, though investors are still hopeful that negotiations and discussions could lead to compromise.
The US dollar index, which gauges the greenback’s strength against a basket of six other major currencies, inched 0.1 percent higher to 89.92.
Moreover, the dollar only slightly budged after a report said that the US forces launched a missile attack over a besieged rebel-held town near a major Syrian air base. The Pentagon quickly denied the reports.
Meanwhile, the euro slid lower 0.11 percent to1.2268, hovering above a 1-month low of 1.2215 seen ahead of Friday’s US jobs data.
The US Labor Department said that the US economy gained the fewest jobs in 6 months last month. However, wage growth perked up a little, suggesting that the labor market continues to tighten.
On the other hand, the data didn’t have much effect on the outlook for monetary policy. Last month, the Federal Reserve raised interest rates. Analysts expect the Fed to raise interest rates two more times this year.
GBP Rises on Strong Housing Data
The British pound climbed up against the dollar on Monday, following a track of third consecutive bullish day of gains. Investors have been encouraged by housing prices data that rose more than expected.
Britain has signed a transition agreement last month in order to cover the 21-month period following its departure from the European Union. This pushed concerns about Brexit to ease up as investors paid more attention to the UK economy prior to an anticipated interest rate hike next month.
GBP gained 0.1 percent against the dollar to $1.4104 following mortgage lender Halifax’s announcement that house prices climbed 2.7 percent in the first quarter of this year.
The data is expected to fuel expectations that the Bank of England will raise interest rates in May by a quarter of a percentage point. It would also diminish lurking fears among investors regarding the country’s vulnerability to a second hike.
On the flip side, housing prices are still crawling up much slower than before 2016 referendum to back out from the European Union.
“House prices recovering somewhat is a welcome piece of news given that one of biggest concerns after Brexit is how UK households will deal with falling house prices,” said Valentin Marinov, head G10 FX strategy at Credit Agricole.