On Friday, in early European trade, the United States dollar has given back come of its overnight gains. Nevertheless, it remains in favor as risk aversion is still dominating, amid rising China-United States tensions.
Index of the United States dollar tracks the greenback against a basket of six other major currencies. Thus, at 0645 GMT (2:45 AM ET), the dollar was down 0.1% and stood at 100.365. Earlier on Friday, it reached a three-week high.
Ahead of a revised German Gross Domestic Product reading at 4 AM, the EUR/USD pair fell 0.03% at 1.0800. Meanwhile, the USD/JPY pair dropped 0.1% to 107.17. That is the situation of the dollar.
The United States President Donald Trump ratcheted up those tensions. It was on Thursday’s interview with Fox Business Network. He stated that he was disappointed with the failure of China to contain the coronavirus. Thus, it had cast a pall over the deal of the trade between the two countries. The United States President Donald Trump suggested that he can even cut off ties.
Analysts at Danske Bank told investors in a note that it can not be ruled out that Trump will pull out of the phase-one trade deal and start to put tariffs back on China.
They said that Trump would risk hurting the economy even further. Moreover, he might jeopardize the necessary votes of farmers in crucial swing states. It will be in case China will pull the plug on purchases of agriculture. Nevertheless, on the other hand, he can gain politically from taking a strict stance on China.
The yuan is overly sensitive to relations between the world’s two most prominent economists. Thus, the yuan in onshore trade was on the back foot touching a one-week low of 7.1026.
It is the current news of the market. Let’s hope that situation will get much better soon in the United States and other countries.
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