The U.S. dollar continued inching higher on Wednesday following President Donald Trump’s State of the Union address, which left little to chew on for currency traders.
Instead, market participants focused on the Australian dollar, which fell sharply after its central bank boss shifted to neutral monetary policy guidance.
Tuesday evening’s State of the Union address included the president’s calling for a border wall as well as the announcement of a second North Korea summit to be held in Vietnam at the end of the month.
Read: Trump stops short of border emergency and omits infrastructure details in State of the Union
The “State of the Union speeches can be watersheds in markets as the U.S. president lays out his agenda, but Tuesday’s edition left little for markets to digest and instead focused on well-trodden issues like immigration,” wrote Adam Button, currency analyst at Intermarket Strategy.
While there was little new on the China trade front in the speech, “Trump also called for infrastructure spending (again) in what could be a boost to economic growth,” Button said.
The ICE U.S. Dollar Index DXY, +0.30% proceeded to edge higher on Wednesday, as it has done each day of the week so far, rising 0.1% to 96.205.
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In economic data, the U.S. trade deficit dropped more than 11% to $49.3 billion in November and manufacturing productivity climbed 1% in the fourth quarter. Due to the government shutdown that latest from late December through most of January, the productivity report was incomplete. The Federal Reserve’s vice chairman for supervision, Randal Quarles, and Fed Chairman Jerome Powell will speak after the closing bell.
The biggest currency mover was indeed not the greenback, but the Australian dollar AUDUSD, -1.7139% after Reserve Bank of Australia Gov. Philip Lowe shifted to a neutral monetary policy guidance just one day after the central bank’s policy update was interpreted more hawkishly by the market.
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“Over the past year, the next-move-is-up scenarios were more likely than the next-move-is-down scenarios. Today, the probabilities appear to be more evenly balance,” Lowe said, sending the Aussie dollar sharply lower versus its U.S. rival.
The Australian currency last bought $0.7129, versus $0.7235 late Tuesday in New York, touching its lowest level since late January, according to FactSet.
Elsewhere in the currency markets, the euro EURUSD, -0.3507% was weaker after Germany reported lower-than-expected manufacturing orders for December. The construction PMI for the eurozone’s biggest economy also slowed to 50.7 in January, compared with 53.3 prior. Any level above 50 denotes economic growth.
The euro last fetched $1.1387, down from $1.1406 late Tuesday.
The British pound GBPUSD, -0.0927% was meanwhile little changed at $1.2962, and the Japanese yen USDJPY, +0.02% was stronger against the greenback. One dollar last bought ¥109.66, down 0.3%, according to FactSet.