The dollar edged lower against its major counterparts on Wednesday, as the reaction to US President Trump’s State of the Union address was rather weak.
In his speech, Trump encouraged bitterly divided Republicans and Democrats to work toward compromises on immigration and infrastructure after a bruising year of partisan battles that focused on Trump’s leadership.
The dollar index, a gauge of the greenback’s strength against a basket of six major currencies, was last down 0.1 percent on the day at 89.062, staying above a three-year low around 88.43 set last week.
EUR/USD climbed to 1.2463 overnight. USD/JPY rose above 109 after the Bank of Japan increased its buying of medium-term Japanese government bonds (JGBs) in a move seen as a warning shot against further rises in bond yields.
The pair has slid to 108.75 since the BOJ announcement. A reduction in the BOJ’s buying of long-dated government bonds earlier in the month had given rise to speculation that the central bank was shifting towards an eventual exit from its large stimulus, giving a boost to the yen.
Focus now turns to the U.S. Federal Reserve’s monetary policy statement scheduled later on Wednesday, and the jobs data on Friday that will also include nonfarm payrolls data and average hourly earnings.
The Fed is widely expected to leave interest rates unchanged this week, and forex investors will be looking to its policy statement for fresh hints on the outlook for interest rates this year.