Investors remain on edge, despite the U.S. moving to ease restrictions imposed on Chinese phone company Huawei. That means global stocks are likely to move lower if the trade war escalates further.
The picture is quite different for the Japanese yen as well as the Swiss franc, with the two currencies firming on Wednesday despite the weak markets.
The Japanese yen continued its strong run against the dollar, rising 0.1% to 110.39 in the morning. That means the safe haven yen is on track to see its monthly gains against the top currency reach 1%.
The Swiss franc also firmed against both the greenback and the euro on Wednesday, with the two currencies marking a growing trend that has seen investors dial back on assets they consider risky.
But JFD’s Charalambos Pissouros says that the market is still weak and skepticism lingers, especially on doubts over long-term recovery.
According to the market analyst, confidence will only return once there are solid signals from both the U.S. and China about a willingness to find a lasting solution.
Measured against a basket of other major currencies, the dollar was also steady, changing at 98.031. The greenback has, however, shed the nearly four-week high of 98.134 in overnight moves. The dollar index is now 1.9% up this year.
Analysts say the demand for the dollar should remain strong based on funding needs from emerging markets.
The euro is steady against the U.S. dollar, currently exchanging at $1.1162 and +0.09 up ahead of a highly anticipated speech by Mario Draghi, the president of the European Central Bank.
The pound is the standout loser, falling nearly 0.3% to 1.2663 to the dollar. It is the lowest the British currency has fallen to in the last four months as uncertainty on Brexit deepened. British Prime Minister Theresa May once again failed to seal a deal for her Brexit plans, this time not winning over both the opposition as well as most lawmakers from her party.