The dollar caught its breath in Asian trading on Thursday, holding above lows hit earlier this week as investors awaited this weekend’s first round of voting in France’s presidential election.
The dollar index, which tracks the U.S. currency against a basket of six major rivals, was slightly higher on the day at 99.752, moving away from a three-week low of 99.465 plumbed on Tuesday.
The euro edged up 0.1 percent to $1.07200, and was expected to tread water ahead of this weekend’s vote.
Centrist Emmanuel Macron held on to his lead as favorite to emerge as the eventual victor, a closely watched poll showed, although it indicated that the outcome of the first round of voting on Sunday was too close to call.
Millions of French voters remain undecided, making this the least predictable vote in France in decades, and raising fears of a potential surprise result that could spread turmoil in markets.
“Some people thought, no way would Brexit pass, no way would Trump win,” said Ayako Sera, senior market economist at Sumitomo Mitsui Trust.
“There have too many recent surprises, so investors are wary of taking positions,” she said.
Data released early on Thursday showed Japan’s exports rose in March at the fastest pace in more than two years, though fears of trade friction clouded the outlook.
Deputy Prime Minister Taro Aso, who heads Japan for a newly-created bilateral economic dialog with the United States, said on Wednesday that Japan has less room to compromise with the United States under a bilateral trade deal.
Against its perceived safe-haven Japanese counterpart, the dollar was up 0.1 percent at 108.99 yen, pulling away from five-month lows touched on Monday.
“There was a reversal of the recent flight-to-safety trend on Wednesday that we’d been seeing,” said Bill Northey, chief investment officer at the private client group of U.S. Bank in Helena, Montana.
“You can see that reflected in the U.S. yield curve, as rates moved a bit higher after release of the Beige Book,” he said, referring to the U.S. Federal Reserve’s periodic report on the economy.
The benchmark 10-year U.S. Treasury yield, which wallowed at five-month lows earlier this week, stood at 2.205 percent in Asian trade, edging up from the U.S. close of 2.202 percent on Wednesday.
The Beige Book showed the economy expanded at a modest-to-moderate pace between mid-February and the end of March, but inflation pressures remained in check despite more difficulties in attracting and retaining workers.
The Fed raised its benchmark interest rate in March for the second time in three months. But in recent weeks, weaker-than-forecast data on employment, consumer spending and inflation, as well as geopolitical tension in Syria and North Korea, have prompted investors to trim their expectations for two more hikes this year, according to interest rate futures.
Secretary of State Rex Tillerson said on Wednesday that the United States was looking at ways to pressure North Korea over its nuclear program as North Korean state media warned the Americans of a “super-mighty preemptive strike” and said don’t “mess with us.”
Investors also remain concerned over doubts whether President Donald Trump’s administration would be able to pass fiscal or tax reforms any time soon.
Sterling added 0.2 percent to $1.2797 after notching a more than six-month high of $1.2908 on Tuesday following British Prime Minister Theresa May’s call for an early general election ahead of Brexit negotiations.