Tensions between the United States and China lifted the dollar. The fall in oil prices hit currencies reliant on the commodity.
Tensions between China and the United States boosted demand for safe-haven currencies. Thus, in overnight trading, the dollar rose. Furthermore, it also held gains in early London trading.
The President of the United States, Donald Trump, said that Washington could react very strongly to the new legislation that China had on Hong Kong. Donald Trump claims that it may lead to further pro-democracy protests.
Amidst the coronavirus pandemic, Sino-American relations have worsened. Against China, the United States ramped up its criticism. Thus, it blamed the country for spreading the virus, which originated in Wuhan.
The United States government moved to block global chip supplies for blacklisted equipment maker Huawei Technologies, last week. Moreover, the Senate of the United States passed some legislation. The legislation may prevent some companies from China from listing their shares on exchanges of the United States.
Dollar and Others
Ulrich Leuchtmann is Commerzbank’s head of FX and commodity research. He said that trade conflict is a strength for the United States dollar (that is an interpretation of the market, at least). Thus, the risk of a relatively weak United States dollar seen over the past few days has come to a (preliminarily) end.
Leuchtmann added that, for the EUR-USD, it means that the excursion above the 1.10-mark was short-lived and will not be repeated for now.
Against a basket of comparable currencies, the dollar was last up to 99.7, since New York’s close. After two consecutive weeks of gains, the United States dollar looks set to end this week down at around 1%.
Against the United States dollar, the euro was down around 0.3$ at $1.092. The common currency hit a three-week high of $1.008.
The Japanese yen was up by around 0.2% at 107.36 against the United States dollar.
- Trading Instrument