The Japanese yen was surpassed by a much stronger dollar on Thursday as it pared some of its declines after U.S. President Donald Trump threatened to eliminate the North American Free Trade Agreement (NAFTA) and shut down the government.
The index which measures the value of the greenback relative to its major opposing currencies, the U.S. dollar index was up by 0.1 percent 93.259. On the dollar’s performance against the Japanese yen, the greenback rose by 0.1 percent to 109.16 yen.
According to some analysts, the U.S. currency may lack directional basis before the U.S. Federal Reserve’s annual central bankers meeting at Jackson Hole that will begin this day.
Investors are currently focusing on the speech of European Central Bank (ECB) President Mario Draghi and Fed chair Janet Yellen this Friday. UBS Wealth Management’s forex analyst Tan Teck Leng said that there is a possibility that Yellen will attempt to prep up the markets for another interest rate hike this year.
Last Tuesday, U.S. President Donald Trump warned the likelihood of him eliminating the NAFTA trade treaty with Canada and Mexico following a three-way meeting failure on bridging deep differences. He also suggested that he might shut down the government if needed to fund the U.S.-Mexico border he proposed to control illegal immigration.
The comments of Trump which was released before the Congress debate regarding raising debt ceiling and spending package has dragged dollar to the negative territory last Wednesday. The Congressional Budget Office said the Congress has to heighten the limit of debts by mid-October to prevent a default.