Business
Against a basket of six major currencies, the dollar inched 0.03% lower to 98.113, hovering within reach of a two-year high of 98.371 reached a week ago
Updated : May 30, 2019, 07:38 AM IST
The dollar held steady against its key rivals on Thursday as escalating Sino-US trade tensions forced investors to take shelter in safe-haven assets, including government bonds.
As the standoff between the world's two biggest economies showed no signs of being resolved, fears of a hit to global growth have rippled through financial markets in recent sessions, with riskier assets, in particular, bearing the brunt of those concerns.
Against a basket of six major currencies, the dollar inched 0.03% lower to 98.113, hovering within reach of a two-year high of 98.371 reached a week ago. The index is up more than 2% for the year.
"The outlook for global growth, and any drag from the festering trade dispute, remain key issues for markets," said Michael McCarthy, Sydney-based chief market strategist at CMC Markets.
"The data over the next twenty-four hours has potential to either confirm or dispel the gloom," he wrote in a note.
Chinese newspapers on Wednesday warned that Beijing could use rare earth elements to strike back at the United States after US President Donald Trump remarked he was "not yet ready" to make a deal with Beijing over trade.
Investor focus is now on US data for an indication about the state of the world's top economy, with market participants awaiting the second estimate of first-quarter gross domestic product growth figures and US weekly jobless claims.
The dollar held mostly steady even after the benchmark 10-year US Treasury yields hit as low as 2.210% overnight, their lowest since the middle of September 2017.
The greenback's status as the world's reserve currency tends to attract safe-haven bids in times of market turmoil and political tensions. The US 10-year yields were last at 2.260%.
The dollar was also underpinned by weakness in the euro on fresh signs of political tensions between Italy and the European Union.
The European Commission wrote on Wednesday to the Italian government asking it to explain the deterioration in the country's public finances, a move that sets the stage for a possible legal clash with the eurosceptic coalition in Rome.
The single currency on Thursday tacked on a tenth of a percent to $1.1142, recovering somewhat after giving up 0.8% in three straight losing sessions.
The Australian dollar added 0.1% to $0.6923.
Elsewhere in the foreign exchange market, the dollar was steady at 109.565 yen, about 0.5% above a more than the three-month low of 109.02 yen touched on May 13.
Analysts said the yen, another safe-haven asset backed by Japan's status as the world's biggest creditor nation, remained relatively weak thanks to domestic investors' demand for dollars.
"As there's persistent yen-selling and dollar-buying from Japanese investors when the rate approaches the 109.10 yen per dollar level, it's not easy for the yen to rise above the 109 level," said Yukio Ishizuki, senior currency strategist at Daiwa Securities.