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PIG TODAY-Dollar gains further traction on Trump tax talk

The dollar gained traction against the yen on Friday, ascending again after President Donald Trump’s pledge to unveil a tax plan in coming weeks.

The U.S. dollar USDJPY, +0.45%  advanced to ¥113.70, higher than ¥113.25 late Thursday in New York. Meanwhile, the EURUSD, -0.0375%  was flat at $1.0661 from $1.0657.

The WSJ Dollar Index BUXX, +0.10%  , a measure of the U.S. dollar against a basket of major currencies, was up 0.09% at 91.05.

The greenback was tracking its overnight strength against the yen following Trump’s comments Thursday at a White House meeting with airline executives that he would make an announcement that would be “phenomenal in terms of tax” within the next three weeks.

The comments boosted optimism that lower taxes would encourage consumer spending and business investments, sending the benchmark U.S. 10-year Treasury yield TMUBMUSD10Y, +0.75%  and U.S. stocks higher. In Tokyo, the Nikkei Stock AverageNIK, +2.49%  was up 2.4% in late trade, providing a catalyst to sell the perceived safety of the yen.

The U.S. bond market selloff also reminded investors of a widening gap between U.S. and Japanese yields, prompting Japanese corporate players to buy the dollar for the purpose of commercial trade settlements in the mid-morning session.

But later in the session, the U.S. currency was struggling to rise further as investors were increasingly sitting on the sidelines ahead of the U.S.-Japan summit meeting.

Trump has accused Japan’s car makers of engaging in unfair trade practices, while his complaint about the dollar’s strength has also raised worries in Japan that he might do something to drive it down to help U.S. manufacturers compete with the Japanese companies.

“We really have no idea about what’s coming out [of the summit],” said Kosuke Hanao, head of FX at HSBC in Tokyo. “But I don’t think we’ll get a particularly good narrative” from the meeting, said Mr. Hanao.

The upcoming talk would turn out to be reminiscent of the U.S.-Japan summit in the early 1990s. The yen strengthened against the dollar after U.S. President Bill Clinton said “the appreciation of the yen” was one of “three or four things working today, which might give us more results” in trying to boost U.S. exports to Japan. Clinton made his remarks at a White House press conference with Japanese Prime Minister Kiichi Miyazawa in April 1993.

In other currency trade, the euro EURJPY, +0.43%  was at ¥121.17 from ¥120.68.

Source: efxnews.com

The dollar gained traction against the yen on Friday, ascending again after President Donald Trump’s pledge to unveil a tax plan in coming weeks.

The U.S. dollar USDJPY, +0.45%  advanced to ¥113.70, higher than ¥113.25 late Thursday in New York. Meanwhile, the EURUSD, -0.0375%  was flat at $1.0661 from $1.0657.

The WSJ Dollar Index BUXX, +0.10%  , a measure of the U.S. dollar against a basket of major currencies, was up 0.09% at 91.05.

The greenback was tracking its overnight strength against the yen following Trump’s comments Thursday at a White House meeting with airline executives that he would make an announcement that would be “phenomenal in terms of tax” within the next three weeks.

The comments boosted optimism that lower taxes would encourage consumer spending and business investments, sending the benchmark U.S. 10-year Treasury yield TMUBMUSD10Y, +0.75%  and U.S. stocks higher. In Tokyo, the Nikkei Stock AverageNIK, +2.49%  was up 2.4% in late trade, providing a catalyst to sell the perceived safety of the yen.

The U.S. bond market selloff also reminded investors of a widening gap between U.S. and Japanese yields, prompting Japanese corporate players to buy the dollar for the purpose of commercial trade settlements in the mid-morning session.

But later in the session, the U.S. currency was struggling to rise further as investors were increasingly sitting on the sidelines ahead of the U.S.-Japan summit meeting.

Trump has accused Japan’s car makers of engaging in unfair trade practices, while his complaint about the dollar’s strength has also raised worries in Japan that he might do something to drive it down to help U.S. manufacturers compete with the Japanese companies.

“We really have no idea about what’s coming out [of the summit],” said Kosuke Hanao, head of FX at HSBC in Tokyo. “But I don’t think we’ll get a particularly good narrative” from the meeting, said Mr. Hanao.

The upcoming talk would turn out to be reminiscent of the U.S.-Japan summit in the early 1990s. The yen strengthened against the dollar after U.S. President Bill Clinton said “the appreciation of the yen” was one of “three or four things working today, which might give us more results” in trying to boost U.S. exports to Japan. Clinton made his remarks at a White House press conference with Japanese Prime Minister Kiichi Miyazawa in April 1993.

In other currency trade, the euro EURJPY, +0.43%  was at ¥121.17 from ¥120.68.

Source: efxnews.com

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