The dollar skidded against the perceived safe-haven Japanese yen on Friday
after the United States launched cruise missiles at an airbase in Syria in
response to Syrian forces’ alleged use of chemical weapons on Thursday.
An U.S. official said the strike has already been completed.
Against the yen, which tends to gain in times of geopolitical tension or risk
aversion, the dollar erased its early modest gains and dropped 0.3 per cent to
110.40 yen, down 0.9 per cent for the week.
Some 50 Tomahawk missiles were launched from U.S. Navy warships in the
Mediterranean Sea, the U.S. official said, speaking on condition of anonymity. A
target was identified as an airbase in Homs. Further details on the target and
the results of the strikes were not immediately known.
Trump ordered the strikes just a day after he pointed the finger at Assad for
this week’s chemical attack, which killed at least 70 people, many of them
children, in the Syrian town of Khan Sheikhoun. The Syrian government has denied
it was behind the attack.
Trump had said on Thursday that “something should happen” with Syrian
President Bashar al-Assad after the poison gas attack in that country.
The air strike comes amid a summit between Trump and Chinese President Xi
Jinping, and will add a new dimension to their talks.
Market participants now await the outcome of talks between the U.S. and
Chinese leaders, as well as the monthly jobs report that could back views for
more U.S. interest rate hikes.
The dollar index, which gauges the greenback against a basket of six major
rivals, was down slightly on the day at 100.63, up 0.3 per cent for the
week.
Later on Friday, the U.S. nonfarm payrolls report is expected to show an
increase of 180,000 jobs in March, compared with 235,000 in February, according
to economists polled by Reuters, which could reinforce expectations that the
Federal Reserve will deliver two more interest rate increases this calendar
year.
The meeting had a strong focus on trade and North Korea’s military programme,
although Masashi Murata, senior currency strategist at Brown Brothers Harriman
in Tokyo, said “I think the market has no strong expectations from the
U.S.-China summit.”
The U.S. president has also warned that he would be ready to act unilaterally
to address North Korea’s nuclear program if China does not step up to help in
the matter.
Trump’s domestic policy agenda was put in the spotlight on Thursday, when
U.S. House of Representatives Speaker Paul Ryan said tax reform would take
longer to accomplish than healthcare reform. Ryan said that Congress and the
White House were initially closer to agreement on healthcare legislation than on
tax policy.
Currency policy was also in focus, after an administration official told
Reuters that “misalignment” was seen as more significant than “currency
manipulation” as a cause of trade deficits.
“Currency misalignment is different from currency manipulation and currency
undervaluation,” the official said. “So we want to see a process of analysing
currency situations that includes whether it’s misaligned, not just whether it’s
devalued or manipulated.”
The euro was slightly higher on the day at $1.0647, after dovish comments
from European Central Bank President Mario Draghi helped push it to a three week
low of $1.0629 overnight. It was down 0.1 per cent for the week.
Draghi said on Thursday that he does “not see cause to deviate” from the
ECB’s stated policy path, which includes bond buying at least until the end of
the year and record-low rates until well after that to stimulate inflation.
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