The U.S. dollar on Thursday was sturdy against a basket of the other major currencies. However, it struggled to make headway as fears over the prospect of a U.S. military strike in Syria rattled markets.
The U.S. dollar index, which measures the strength of the greenback against a trade-weighted basket of six major currencies, was little changed at 89.26, just above its two week lows of 89.04.
Meanwhile, after a Russian diplomat stated that the forces of his country would shoot down U.S. missiles launched at Syria, U.S. President Donald Trump warned Russia to “get ready” for an imminent military action as a response to the alleged chemical attack last weekend.
The comments of Trump increased the possibility of direct military conflict between the U.S. and Russia in Syria.
The dollar, however, failed to find support from Wednesday’s Federal Reserve minutes with investors focusing on Syria tensions.
The March meeting of Fed minutes showed that the officials believe that while the economy will remain steady and that the inflation will increase in the coming months they remained wary about the impact of the trade and fiscal policies of the Trump administration.
On the other hand, the euro was slightly changed, with EUR/USD last at 1.2369.
The pound was stable against the U.S. currency, with GBP/USD trading at 1.4184.
Dollar Strong against Yen
On Thursday, the U.S. dollar increased against Japanese yen. But, its gains were thin as the possible Western military action against Syria gave support to the safe-haven Japanese currency.
Meanwhile, the tension in Syria shifted the focus away from the U.S. and China trade standoff. The dollar went up 0.1 percent to 106.88 yen after dropping 0.4 percent on Wednesday.
Following the comments from President Xi Jinping calmed concerns over the U.S. and China trade tensions, the dollar increased to 107.400 yen on Tuesday.
“The yen has gained against the dollar on geopolitical concerns. The dollar has weakened against other currencies as well, but other factors are more at play, such as higher commodity prices and ECB monetary policy expectations,” stated Masafumi Yamamoto, a chief forex strategist.
“As for the Syrian tensions, divisions are seemingly being drawn along Cold War era lines with the United States, Britain and France on one side and Russia on the other, suggesting any standoff could be prolonged.”
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