The U.S. dollar remained trading near recent lows Wednesday after U.S. President Donald Trump renewed his threats over Greenland ahead of a speech at the World Economic Forum.
At 03:55 ET (08:55 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% lower to 98.400, extending the 0.8% overnight fall, its worst single-day performance in six weeks.
Subscribe to InvestingPro for more detailed foreign exchange analysis Dollar remains on backfoot The dollar remains unloved after President Donald Trump renewed his stance that America must gain control of Greenland, a semi-autonomous territory that’s part of Denmark.
"I think we will work something out where NATO is going to be very happy and where we’re going to be very happy. But we need it for security purposes. We need it for national security," he said.
Asked how far he is willing to go to acquire Greenland, Trump offered a cryptic response. "You’ll find out," he said.
Trump is set to speak at the World Economic Forum in Davos, Switzerland, later in the session, and is widely expected to escalate his push for acquiring Greenland.
“Greenland will be the dominant theme today and there may be scope for de-escalation, offering the dollar some support,” said analysts at ING, in a note.
“Trump is meeting EU leaders in Davos today, and if the past year has shown anything, it’s that face‑to‑face engagement tends to provide the best opportunity for tensions with the U.S. president to ease.”
Pound helped by inflation release In Europe, GBP/USD edged 0.1% higher to 1.3442, after the release of data showing U.K. consumer inflation rose by more than expected in December, giving Bank of England policymakers food for thought ahead of the next policy meeting in early February.
The annual CPI index rose to 3.4% last month from 3.2% in November, above the 3.3% expected.
Inflation in Britain remains the highest in the Group of Seven, despite the country’s sluggish economic growth, but the pace of price increases is expected to slow sharply in the coming months as last year’s rises in utility costs and other government-controlled tariffs fall out of the annual comparison.
The Bank of England cut interest rates by 25 basis points in December, but is generally expected to leave monetary policy unchanged next month.
EUR/USD fell 0.1% to 1.1709, edged back from the three-week highs seen during the previous session with the situation surrounding Greenland firmly in the spotlight.
“Our view is that unless bond volatility spikes again – not our baseline – EUR/USD belongs below 1.170 in a seasonally strong period for USD and in light of the recent hawkish repricing of front-end USD yields,” ING added.
Yen steadies after selloff In Asia, USD/JPY slipped 0.2% to 157.84, with the pair steadying after large swings in the previous session, remaining under pressure after a brutal selloff in Japanese government bonds (JGBs).
