A man counts U.S dollars and Euros at a money changer office in central Cairo, Egypt, December 27, 2016. Photo: Reuters/Mohamed Abd El Ghany
A man counts U.S dollars and Euros at a money changer office in central Cairo, Egypt, December 27, 2016. Photo: Reuters/Mohamed Abd El Ghany

The dollar pulled away from recent lows on Thursday after the Federal Reserve presented a relatively upbeat view of the U.S. economy at its first meeting since President Donald Trump took office.

The dollar index, which tracks the greenback against a basket of six major rivals, edged slightly higher to 99.679 , moving away from a more than seven-week low of 99.430 plumbed on Tuesday.

Against the yen, the dollar was buying 113.12, down 0.1 percent but well above Tuesday’s low of 112.08, while the euro was steady on the day at $1.07735.

While the Fed refrained from giving any explicit rate-hike signals or the timing of its next move, it said job gains remained solid, inflation had increased and economic confidence was rising. Policy makers also said some market-based measures of inflation were still low.

But the relatively brighter view came against a backdrop of concern about the potential impact of Trump’s protectionist stance, as well as his recent comments about currencies.

On Tuesday, Trump and a top adviser strongly criticized Japan, China and Germany, claiming they had all devalued their currencies to benefit their own countries.

“As the US economy accelerates, some believe it can tolerate a stronger dollar, but I don’t think that’s true. I don’t think the US government will tolerate it,” said Masafumi Yamamoto, chief forex strategist at Mizuho Securities.

While the dollar initially rallied after Trump’s election as markets seized upon his promises for stimulus steps, tax reform and deregulation, it has tended to slump whenever he has talked about withdrawing from international trade agreements.

“It’s still a tug-of-war, between protectionism and stimulus hopes,” Yamamoto said.

Data on Wednesday reinforced views of economic improvement. US factory activity accelerated to more than a two-year high last month.

The ADP National Employment Report also showed private employers added 246,000 jobs in January, up from 151,000 in December. The nonfarm payrolls report on Friday is expected to show employers added 175,000 jobs last month, according to the median of 102 economists polled by Reuters.

The Fed has forecast three rate increases in 2017. While economic improvement would prompt it to raise interest rates, the market is pricing in less than a 50 percent chance of a hike until the Fed’s June meeting, according to the CME Group’s FedWatch Tool.

“If the Fed does move in March, we could see as many as four hikes in 2017, and as long as data remains supportive, very likely three hikes,” BlackRock Inc’s chief investment officer of global fixed income Rick Rieder said in a note.