alexa certify
0

Dollar Surges over U.S.-China Worries

The U.S. dollar surged on forex Monday amid fears that last year’s U.S.-China trade war would resume.

Markets worry that the dispute this time will be over the novel coronavirus.

U.S. President Donald Trump and Secretary of State Mike Pompeo have pinned the blame for the pandemic on China. It is the country where the new coronavirus outbreak is believed to have originated.

Pompeo said on Sunday, there was a significant amount of evidence where the virus came from. He said that the virus emerged from a laboratory in the central Chinese city of Wuhan.

Pompeo did not provide evidence, nor dispute a U.S. intelligence conclusion that the virus was not man-made. However, the comments double down on Washington’s pressure on China as U.S. deaths and economic damage mount.

Simon Harvey, currency analyst at broker Monex Europe said this morning’s session is being dominated by risk-averse trading. Investors have weighed the negative consequences to global growth from another escalation in the U.S.-China tensions.

This has caused the dollar to surge in the FX market.

The headlines of further tariffs and supply chain disruptions come at a time where global growth expectations are already fragile. This has caused currencies such as the sterling and the euro to trade on the back foot this morning.

This is despite exit measures set to be announced or implemented in their respective economies, Harvey added.

The Dollar Surges against Major Currencies

The euro was last down 0.4% at $1.0932 while the sterling was also down by 0.4% to $1.2442.

The U.S. currency was also surging against Scandinavian currencies, which are so vulnerable to global trade risks. The Swedish crown was last down 0.6% at 9.8995 versus the dollar.  The Norwegian crown was falling by 0.8% at 10.3975.

However, the biggest move in the currency markets was the Chinese yuan. It fell to a six-week low of 7.1555 against the dollar in the offshore market.

It was last flat at 7.1380, but the Chinese currency fell again. The next levels to watch would be the mid-March low of 7.1651 and the early-September low of 7.1975.

Analysts were debating how the United States might attack China again. With more trade tariffs or even cancelling the payments on the U.S. Treasury that China owns. But they all agreed the USD/CNY cross would see higher volatility.

Lee Hardman, a forex strategist at MUFG said a re-escalation in U.S.-China trade tensions might help. It can bring an end to the relative stability in USD/CNY.

The moves extended a sour start for May, which began with Friday’s bleak U.S. data. It was followed by the threat of a fresh trade war between the world’s two biggest economies.

The Japanese yen was the only major currency that rose against the U.S. dollar. In forex trading, it was last up 0.2% at 106.71.

Comments Rating 0 (0 reviews)

Get the latest economy news, trading news, and Forex news on Finance Brokerage. Check out our comprehensive trading education and list of best Forex brokers list here. Subscribe now and receive FREE updates on the market today!

Leave a Reply

Sending

Subscribe to Our Newsletters

Have the best of Finance Brokerage News delivered directly to your mailbox. Subscribe now to receive the latest market news.