LONDON: The dollar edged higher on Tuesday as some investors judged that its recent decline to a three-year low may be coming to a close amid growing concern over the U.S. stance on global trade.
U.S. President Donald Trump imposed import tariffs on washing machines and solar panels, putting a cloud over global trade at a time when its revival has fueled hopes for a stronger world economy.
Trump is slated to give the closing address at this year´s Davos summit of political and business leaders on Friday, and some analysts expect him to strike a protectionist stance on trade, which may spark a selloff in emerging market currencies.
"If Trump decides to strike a strong anti-trade stance, it will spark a selloff in global trade-oriented currencies such as the Korean won and the Chinese yuan and eventually weigh on the U.S. dollar as well," said Viraj Patel, an FX strategist at ING in London.
In a recent note, Blackrock strategists said the global economy has never been so integrated at this point of an expansion, with world trade making up about 50 percent of global gross domestic product -- much more than in the last cycle.