Dollar Fights to Maintain Gains
The dollar traded higher against most of its primary trading partners early on Tuesday, boosted by political uncertainty in Europe which weighed on the euro. On Monday, German Chancellor Angela Merkel’s interior minister scuffled with coalition partners over migration policy. The skirmish ended with the Horst Seehofer, the interior minister, threatening to resign. The German government and the country’s citizens have a growing anti-migrant sentiment that has threatened to bring down Merkel’s coalition. To save her government, Merkel agreed to build border camps for asylum seekers and to tighten the Austrian border. The move comes despite Merkel’s previously staunch open arms policy upon which she built her political reputation. Merkel has created policies that have seen Germany welcome more than 1 million migrants since 2015, in a time when most of her European counterparts have closed their doors.
Merkel has also come under pressure outside her borders recently after U.S. President Donald Trump wrote a letter to Chancellor Merkel and several other NATO allies, criticizing them for spending too little on defense, and serving as a poor example for other countries.
The euro was trading lower against the dollar, down 0.04 percent to $1.1634 as of 10:21 a.m. HK/SIN. The dollar also started the day off with gains against the British pound and the Swiss franc, though it was lower against the yen, trading at 110.87. The dollar index was up 0.05 percent to 94.92 .DXY.
The Reserve Bank of Australia (RBA) will be holding its monthly policy meeting on Tuesday and is largely expected to keep interest rates steady at 1.5 percent, the rate they’ve maintained since mid-2016. The Australian dollar hit a 1 ½ year low on Monday on trade concerns.