Search on for drivers as dollar at 7-week lows

Japan’s central bank keeps policy settings unchanged

The dollar neared a sevenweek low against a basket of other currencies yesterday, while commodity currencies advanced on relief that the latest round of tariffs announced by China and the US were not as harsh as the market expected.

The greenback has gained nearly 6 per cent since concerns of trade wars shot into the spotlight as markets bet that a strong US economy and safe-haven demand for the greenback would push the dollar higher.

But price action this week suggested that investors are growing cautious of pushing the dollar higher after recent data such as US inflation last week have indicated some softness.

Against a basket of other currencies, the dollar drifted 0.1 per cent down to a low of 94.317, just above a two-month low of 94.308 hit in the previous session.

“Positions are being adjusted, and unless we see a comeback of those factors that have pushed the dollar higher earlier this year, markets will settle around these levels,” said Jane Foley, a senior currency strategist at Rabobank in London.

Against the yen, the dollar rose to its highest since July 20 at 112.42 yen after the Bank of Japan left interest rates unchanged and reiterated its desire to boost consumer inflation to 2 per cent.