The Dollar has risen to a 1½ week high as compared to the yen on Friday after US President Trump commented about announcing a tax reform plan more ambitious than the one in the Reagan era in the coming weeks.
In the beginning of the month, a knock-back was observed on the dollar against yen and euro as the President’s focus was on trade policies and since coming to power, he appeared to be backing a weaker dollar.
Trump finally broke his silence on stimulus measures this Thursday, as he promised on releasing a tax plan that was phenomenal in a meeting at White House with executives of airlines. He didn’t release any specifics on the matter, but he did say that tax burden on businesses will be lowered.
The dollar index as compared to the other major currencies was at 100.610 steadily after it touched 100.710 .DXY, which was the highest it had gotten the past three days. It was said to rise 0.8% this week, but it still has a long way to touch the 14 year peak of 103.820 it achieved early this January.
There was a little change in the euro at $1.0666 and this was after 0.4% loss the day before. Dollar rose itself overnight to a nine day high of about 113.800 yen.
Due to President Trump’s statements, US Treasury’s yields increased sharply due to which there was a soaring effect of 1.2% in the greenback against yen. There was a steady decline in the Treasury yields earlier till Thursday as they declined to multiple week lows, which pushed the dollar to a trough of 10 weeks of 11.590 yen.
Now all the focus of the market has shifted to the Friday-Saturday summit between Japanese Prime Minister Shinzo Abe and President Trump. There is a possibility that Trump is just reiterating his opposition to a dollar that is strong and there is a special attention to be paid to the currency policies that would be discussed at the summit.
Trump’s top advisor in trade and the president himself were criticizing Japan, China and Germany the previous week by pointing out that they were trying to devalue their currency causing disadvantage to the United States of America.
In other places, according to Chinese trade data, the Australian dollar was up by 0.4% at $0.765. This dollar is generally used as a liquid proxy for trades related to China. The New Zealand dollar was also up by 0.2% to $0.7199, which is somehow stable as compared to the 1.1 percent slide it took the day before when their central bank clarified that the rate hike would happen later and not sooner.
Although manipulation of currency is not at the top of the list of topics Trump would cover at the summit, a senior US official mentioned that it might be covered.