Investing.com – The dollar oscillated around the 94 value in Friday morning trade in Asia while gaining slightly against major Asian currencies. Japan and China released their manufacturing data, and the U.S. reignited likelihood of a global trade war.
The U.S. dollar index climbed to this year’s fresh high at 94.93 on Wednesday then lost its rally. The index that tracks the greenback against a basket of six major currencies added 0.16% to 94.10 at 11:20PM ET (03:20 GMT).
On Thursday, U.S. President Donald Trump’s administration said the EU, Canada and Mexico would be soon subject to tariffs on imported steel and aluminum as White House refused to extend the reprieve.
This is another move by the U.S. to impose tariffs to target other countries, including the tariffs on US$50 billion worth of Chinese imports earlier. Canada, Mexico, Europe and China all said they would retaliate quickly and in kind.
In Japan, the USD/JPY pair gained 0.33% to 109.18. The yen did not react to Japan’s stronger-than-expected economic data on Friday. Capital spending by Japanese companies rose 3.4% in the January-March quarter from a year earlier, compared to the estimated 3.2%.
In addition, Japan's manufacturing PMI(PMI) for May also came in at 52.8, beating the forecast 52.5. For PMI, a reading above 50 signals an improvement, while one below 50 points means a contraction in manufacturing activity.
On a side note, the Bank of Japan reduced the purchases of Japanese Government Bond maturing in 5-10 years to 430 billion yen from the previous 450 billion yen. While the drop in bond purchases by the central bank is widely considered bullish for the domestic currency, the yen did not pick up either.
In China, the People's Bank of China set the set the reference rate for the yuan against the dollar, the mid-point from which the currency is allowed to trade, at 6.4078 versus the previous day's 6.4144. The USD/CNY pair gained 0.12% to trade at 6.4168.
China's Caixin manufacturing PMI for May came in at 51.1, slightly below the expected 51.3.
The AUD/USD pair lost 0.22% to trade at 0.7550. The sentiment-linked Aussie remained bearish after the release of China’s PMI data.