USD dips on tough trade talk

The U.S. dollar continues to slip against other G10 currencies, reacting to recent import tariffs and comments from the Trump team on trade.

Treasury Secretary Steven Mnuchin backed the dollar’s weakness when speaking at the World Economic Forum in Davos, saying the dollar’s decline was “obviously” good for the U.S. and trade. The U.S. Dollar Index fell to its lowest level since December 2014.

Secretary of Commerce Wilbur Ross continued tough trade rhetoric, saying “trade wars are fought every single day.” He also indicated that further protectionist measures – like the recent import tariffs on solar panels and washing machines – are on the horizon. In a separate interview Wednesday, Ross said there was a good chance NAFTA renegotiation talks would succeed.

EUR/USD hit a fresh three-year high, GBP/USD is trading at its highest point since the Brexit vote, and USD/JPY is pushing lower than 110, hitting a more than four-month low.

This is all ahead of President Trump’s trip to Davos starting Wednesday and his speech on Friday.

Greenback can’t fight strong U.K. jobs data

Comments from U.S. officials backing the weaker dollar and strong data from the U.K. labor market are pushing the GBP/USD pair to its highest point since the Brexit vote while eyeing the 1.42 mark.

Unemployment in the U.K. hit record lows, and the country added 102,000 jobs between September and November 2017. Wage growth met expectations, rising 2.5% year over year.

After trading in the 1.39s yesterday, the cable broke through 1.40 and is currently hovering in the high 1.41s. We’ll see if the trend continues this week when the U.K. releases its fourth-quarter GDP results and the U.S. releases preliminary Q4 GDP results Friday.

Euro staying strong ahead of ECB meeting

The greenback’s slide, combined with strong economic data across Europe Wednesday, has caused EUR/USD to hit a fresh three-year high, trading around 1.236.

Despite declines in French and German manufacturing PMIs, a rise in services PMI helped lift the composite PMI to 58.6 above market expectations.

Markets are highly anticipating the European Central Bank’s monetary policy announcement Thursday, when ECB President Mario Draghi may have to address if the euro is too strong.

– Steve Thompson, the WorldFirst Team