The U.S. dollar traded near seven-week lows against its primary trading partners on Thursday as traders edged away from the currency on fears of the spiraling trade war between the United States and China. The dollar index was down 0.03 percent to 94.50 .DXY as of 1:16 p.m. HK/SIN, near a seven-week low of 94.308 that was hit on Tuesday. The greenback was down 0.17 percent against the yen, trading at 112.10. The pound and euro also gained against the dollar, trading at $1.3149 and $1.168 respectively.
Chinese Premier Li Keqiang announced on Wednesday that his country would implement new tariffs on approximately $60 billion of U.S. goods, a direct response to the $200 billion of tariffs that U.S. President Trump implemented on Chinese goods on Monday.
Despite the dollar’s struggle, it remains on course for its strongest weekly gain in 2018, with a one-week rise of just under 1 percent. Analysts have noted that the victory of the far-right Alternative for Germany party in last week’s election boosted confidence in the dollar against the euro, as traders began to worry that anti-European sentiments in the EU could underpin the common currency. Germany isn’t the only country to face strong anti-European movements; it follows Spain and Italy that have already shown this side of their political agenda.
A new wave of Brexit talks tested the pound further on Thursday, after the currency hit two-month highs yesterday when UK inflation data surpassed market expectations. Though the pound remained strong against the dollar, it retreated slightly after Prime Minister Theresa May’s comments that the UK rejected the latest offer from the EU to resolve the Irish border issue.