WASHINGTON (dpa-AFX) - The U.S. dollar gained against most major currencies on Wednesday amid rising concerns about U.S.-China trade tensions and fears that the dispute could escalate into a full-fledged trade war.
Worries about U.S.-China trade tensions have risen after Chinese newspapers said Beijing may use its dominance of rare earths as a counter in its trade battle with Washington.
The U.S. imports about 80% of its rare earth elements, used in a host of electronic components, from China.
The Swiss franc and the Japanese yen traded firm against the greenback. However, the yen turned weak after initially surging higher.
The Yen was up early on in the session, but retreated and lost ground against the greenback as the day progressed.
The dollar index advanced to 98.22 after opening below 98 and was last seen hovering around 98.15, up 0.2% from previous close.
Against the euro, the dollar was up 0.24%, with a unit of euro fetching $1.1135, and against the Sterling, it was up 0.21% at $1.2627.
The European Central Bank today warned that risks to financial stability in the euro area are rising amid a slowing global economy and escalating trade tensions.
Uncertainty surrounding the global economic growth outlook have led to 'bouts of high volatility in financial markets', the bank said as it released the latest Financial Stability Review report.
Slower than expected growth and a possible worsening of trade tensions could trigger further falls in asset prices, the report warned.
'If downside risks to the growth outlook were to materialize, risks to financial stability may arise,' ECB Vice-President Luis de Guindos said. 'The growth outlook is central to all the main risks to financial stability,' he added.
The Japanese currency was down 0.23% at 109.62 yen a dollar, after rising to a two-week high of 109.15 earlier.
Against the Aussie, the dollar was up 0.07% at 0.6919. The dollar was up against the loonie as well, gaining notable ground at 1.3515.
The loonie weakened after the Bank of Canada left its key rate unchanged, saying that the recent economic slowdown was temporary and the growth is expected to pickup in the second quarter.
The recent data have reinforced Governing Council's view that the slowdown in late 2018 and early 2019 was temporary, the bank said in its accompanying statement.
Hence, the governing council assessed that the degree of accommodation being provided by the current policy interest rate remained appropriate and said that it would remain data dependent and assess developments in household spending, oil markets and the global trade environment, with regard to interest rates.
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