The dollar traded above its recent lows against major rivals on Friday, having bounced after US President Donald Trump said he wanted a "strong dollar", contradicting earlier comments made by Treasury Secretary Steven Mnuchin. Trump told CNBC in an interview in Davos, Switzerland, on Thursday that he ultimately wants the dollar to be strong, adding that Mnuchin's comments had been misinterpreted.
The dollar's bounce pulled the euro away from three-year highs and knocked sterling off its strongest levels since June 2016. The dollar stayed steady against the yen, holding above a four-month low struck on Thursday. Against a basket of six major currencies, the dollar last traded at 89.176, staying above a three-year low of roughly around 88.43 set this week. The dollar index has slid more than 3 percent so far in January. Some market participants doubted whether Trump's comments would be enough to change the recent trend of dollar weakness.
"The market forces, fundamentals all suggest that the dollar should weaken over the course of 2018," said Roy Teo, investment strategist for LGT Bank in Singapore. Trump is due to address the World Economic Forum in Davos later on Friday. Market participants say the dollar has faced headwinds because its relative yield attraction is seen at risk as the world's major central banks are seen winding up their stimulus.
The dollar has also been hampered by concerns over US protectionism. The euro last traded at $1.2424, up 0.2 percent on the day but down from Thursday's high of $1.2538. Sterling rose 0.4 percent to $1.4191, but remained well below its peak on Thursday of $1.4346, which was the pound's highest level since the Brexit vote in June 2016. Against the yen, the dollar held steady at 109.42 yen, staying above a four-month low of 108.50 yen struck on Thursday.
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