TOKYO: The dollar recovered ground on Thursday, drawing relief from positive labour market data and the White House saying Canada and Mexico, and possibly other countries, may be exempted from planned U.S. import tariffs on steel and aluminium.
Elsewhere on the currency markets, the euro trod water ahead of a European Central Bank meeting, later in the day, that is expected to leave policy rates unchanged for now, but may provide clues to the future.
The dollar had weakened sharply following the resignation on Tuesday of Gary Cohn, the top economic advisor to the White House who was seen as seen as a bulwark against protectionism in President Donald Trump´s administration.
His departure had fanned fears of a potential global trade war if Trump pressed ahead with proposals for tariffs on all imports of steel and aluminium.
Broader financial markets grew calmer, with Wall Street paring losses overnight, after the White House raised the possibility of exemptions.
Some dealers have bet on the possibility that the tariff threat was a negotiating ploy in trade talks with neighbours.