Investing.com – The dollar edged up on Thursday as market players prepare for a potential full-scale Sino-U.S. trade war.
On Friday, the U.S. is scheduled to impose tariffs on $34 billion of Chinese goods. Beijing has said earlier it would slap tariffs on an equal value on U.S. exports including agricultural and auto exports.
However, Chinese Ministry of Finance said in a statement on Wednesday that China would “never fire the first shot”, and that the country would not implement tariffs ahead of the U.S., despite recent reports suggested that Beijing would begin imposing tariffs hours ahead of the U.S. due to the time zone difference.
The U.S. Dollar Index, which tracks the greenback against a basket of six major currencies, climbed 0.11% to 94.29 on Thursday by 12:30AM ET (04:30 GMT). The index slipped to 94.397 on Wednesday, its lowest level in over a week.
The perception of the relative strength of the U.S. economic growth and the attraction of its higher bond yields were also cited as supporting the dollar.
Meanwhile, the yuan was mostly unchanged on Thursday, as the USD/CNY pair edged up 0.01% at 6.6370 after the central bank attempted to stem its recent tumble.
Yi Gang, governor of the People’s Bank of China, said in a statement on Tuesday that the central bank would closely monitor fluctuation in the forex market and would take action to keep the yuan at a stable and reasonable level.
"Chinese authorities had initially appeared to approve a fall in the yuan to support the economy ahead of a possible start of U.S. tariffs," said Minori Uchida, chief currency strategist at MUFG Bank.
"But then there's a memory of massive capital outflows in 2016, which wiped out a quarter of their foreign reserves. So I would think they felt they needed to stem the yuan's fall. Given that, the yuan may stay firm for now," he said.
The USD/JPY pair traded at 110.35, off a six-week high of 111.14 set on Tuesday.