The United States dollar index was down 0.4%. Against the dollar, the was up by 0.4%. The Swiss franc hit its highest in five years.
After reaching its lowest point since September 2018 overnight, the dollar steadied early on Monday. Deteriorating China-United States relations weakened it. Moreover, U.S. COVID-19 infections showed no sign of slowing. Thus, there are also domestic economic concerns.
These domestic economic concerns are trumping its role as a safe-haven currency. Before steadying in early London trading, the dollar index fell overnight. The dollar index was at 94.054, down by 0.3% on the day at 0736 GMT.
Mike Pompeo is the Secretary of State of the United States. He said that Washington and its allies must use more positive and creative ways to make the Chinese Communist party change its ways.
The United States
Unfortunately, COVID-19 infections show no signs of slowing in the United States. Thus, investors are doubtful of a quick economic recovery. Approximately a quarter of the global total coronavirus deaths have been in the United States. Their unemployment claims rose unexpectedly last week.
There were some earlier steps to mitigate the financial impact, for example, enhanced jobless benefits. Nevertheless, they are due to expire this month, and Congress has to agree on new support.
Hao Zhou and Ulrich Leuchtmann are Commerzbank analysts. They wrote that, in the past, the dollar could have benefited from the United States-Chinese trade conflict. Nevertheless, it is no longer the case. Trade is no longer the only issue. The U.S. might be overstepping the mark with its policy towards China, just as with measures against some European countries.
The U.S. dollar weakness we see at the moment would only be a very watered-down taste of things to come if the dominance of the dollar in international trade and capital markets was to be decreased as a result.
