Investing.com – The dollar extended its retreat against a basket of major currencies as Treasury Secretary Steven Mnuchin’s endorsement of a low dollar attracted heavy selling pressure in the greenback.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell 0.98% to 89.00.
“Obviously a weaker dollar is good for us as it relates to trade and opportunities," Mnuchin told reporters in Davos, according to Bloomberg.
Also adding to the dollar weakness, was a modest uptick in safe-haven demand amid growing fears of a US-China trade war after Commerce Secretary Wilbur Ross claimed that China’s tech ambitions under its 2025 were a “direct threat” that is being implemented “by disrespect for intellectual property rights” among other “very bad things.”
That sparked a further retreat in the dollar as investors fled to safe-haven yen and Swiss franc.
USD/JPY fell below its 100-day moving average to Y109.11, down 1.11%, while the USD/CHF fell 1.16% to 0.9466.
GBP/USD rose 1.52% to $1.4217 as the pair eyes a test of pre-Brexit vote levels around $1.5. The sharp uptick in the pound came as investors cheered bullish employment data including a uptick in wage growth, which stoked expectations for a faster pace of inflation, raising the prospect of an interest rate hike.
EUR/USD, meanwhile, rose 0.89% to $1.2407 and was said to be nearing a test of its 200-month moving average at $1.2412, a day ahead of the ECB meeting Thursday, when many expect the central bank to keep rates unchanged but focus will likely be on ECB president Mario Draghi press conference.
USD/CAD fell 0.63% to C$1.2342.