Money Exchange: Dollar Declines as Concerns in US-China Trade War Prolongs
The U.S. Dollar Index, which tracks the greenback against a basket of other currencies, dropped to 0.02% to 94.61. In the US session, the index made a 94.434 decrease overnight which is the lowest from July 31.
According to Chief Currency Strategist Minori Uchida at MUFG Bank in Tokyo, the investors were thoroughly watching the Sino-US trade dispute’s development on the approaching due date of US President Donald Trump’s comment about imposing another $200 billion on Chinese imports.
Last week, lower-level trade talks between US and China officials closed with a minimal progress. Meanwhile, there were reports that Trump plans to meet his China counterpart Xi Jinping within the year to discuss more the issues of trade.
On Wednesday, the USD/CNY increased to 0.2% to 6.8153 on the praise of U.S. Treasury Secretary Steven Mnuchin to China’s support on the yuan just a week after the accusation of China to Donald Trump’s manipulation of its currency.
“Their currency is more of a controlled currency than other markets that are free access. But if they go in and support their currency, that is not currency manipulation. If they [China] let their currency weaken, either for structural reasons or for actual manipulation, that is something that is manipulation,” Mnuchin said in an interview.
The comments of Mnuchin followed after Trump said that the yuan has been manipulating by China to make up for its payment on tariffs imposed by the United States.
Elsewhere, the USD/JPY pair made a decline of 0.03% to 111.17. The AUD/USD pair made a minimal change at 0.7336 after a 0.1% loss on Tuesday. Meanwhile, the NZD/USD was unmoved at 0.6708.
Money Exchange: Yuan weakens against the dollar after a three-day winning streak
On Wednesday, the Chinese yuan weakened against the US dollar after its consecutive winning streaks in three days. The decrease in the Chinese currency was dragged down by the dollar’s increasing demand.
Early in the week, the yuan displayed some stability and rested its sharp plunge following the movement of the central bank to put a floor under the currency amid the ongoing trade war with the United States.
On Friday, the People’s Bank of China (PBOC) made an announcement that in early August; it has already commenced the change of the bank’s calculation on the mid-point of yuan with continuous the use of a “counter-cyclical” variable. This became a further sign of the Chinese authorities’ disapproval on maintaining to weaken the yuan after a straight 10-week decline.
“The market is looking for a bottom on the ‘counter-cyclical factor’ and on the pragmatic scale, the Fed is still going to raise rates and ultimately that should favor the USD,” said Stephen Innes, Singapore-based head of Asia-Pacific trading for OANDA.
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