The US-China Tensions Boosted the Dollar
Tensions between the United States and China revived. Besides, the global economic recovery seems uncertain. The coronavirus cases resurged in Europe and the United Kingdom. These factors played a significant role in strengthening the US dollar, seen as a safe-haven.
On the other hand, Fed policymakers’ confidence and robust US housing data gave an additional boost to the dollar’s rally. Jerome Powell, the Fed chairman, stated that the US economy remains flexible during the crisis. Charles Evans, Chicago Fed chairman, noted that the USA’s central bank could increase interest rates before reaching the targeted 2%.
The US president, Donald Trump, criticized China again its responsibility for the coronavirus outbreak globally. It caused the tensions between the two countries to revive again.
The rally on Wall Street supported Asian stocks. However, they showed mixed results. US equity futures traded moderately higher as the dollar remained strong.
Moreover, comments on interest rate cuts from the Reserve Bank of Australia and falling retail sales in the country weakened the AUD/USD pair.
Brexit Talks Forecasted to be More Effective
The NZD/USD momentarily bounced from the monthly lows of 0.6599.
The USD/JPY pair remained stable above the 105.00 level.
The EUR/USD dropped to new two-month lows of 1.1675. Growing concerns about the increase in the coronavirus cases and strengthening restrictions and confinements in many eurozone economies undermined the pair. Now investors are awaiting preliminary eurozone manufacturing and services PMIs.
Moreover, the GBP/USD pair dropped below 1.2700 after the United Kingdom’s prime minister, Boris Johnson, revealed new restrictions.
Andrew Bailey, the Governor of the BoE, stated that negative interest rates are not possible in the short term. The Brexit drama is still getting attention. Michel Barnier, European Commission’s Head of Task Force for Relations with the UK, heads to London for informal trade talks. Brexit negotiations are expected to produce better results.
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