Dollar Extends Slide As Geopolitical Tensions Weigh

0 24

The U.S. dollar stayed weak for yet another day, as rising tensions between the U.S. and China, worries about coronavirus spread and the continued disagreement between The White House and Senate Republicans with regard to a relief package weighed on the currency on Friday.

Markets were also reacting to a slew of economic data from across the world.

U.S.-China ties have deteriorated further after China ordered the U.S. consulate in the southwestern city of Chengdu to close in response to the closure of the Chinese consulate in Houston earlier this week amid accusations Chinese diplomats aided in economic espionage and the attempted theft of scientific research.

A statement from China’s Foreign Ministry claimed the move by the U.S. violated international law and seriously damaged U.S.-China relations and called the closure of the U.S. consulate in Chengdu a “legitimate and necessary response to the unreasonable actions of the United States.”

“The current situation between China and the United States is something China does not want to see, and the responsibility rests entirely with the United States,” the statement said, urging the U.S. to immediately revoke the “erroneous decision.”

The dollar index dropped to a low of 94.33, losing nearly 0.4% from previous close.

Against the Euro, the dollar weakened to $1.1659, giving up 0.52%. The euro area private sector grew at the fastest pace in just over two years in July due to the relaxation of the coronavirus containment measures, flash survey data from IHS Markit showed. The composite output index rose to a 25-month high of 54.8 from 48.5 in June. This was also above economists’ forecast of 51.1.

The flash services Purchasing Managers’ Index advanced to 55.1 from 48.3 in June. The expected reading was 51.0. The flash manufacturing PMI came in at 51.1 versus 47.4 in June and forecast of 50.0.

The British Pound Sterling was stronger by nearly 0.5% at $1.2800. Final data from market research group GfK showed UK’s consumer confidence index came in at -27 in July, unchanged from flash estimate but above from June’s score of -30.

UK retail sales logged a double-digit growth in June as non-food and fuel stores continued their recovery from the sharp falls experienced since the start of the coronavirus pandemic. Retail sales volume advanced 13.9% on month, faster than the 12.3% rise in May and bigger than economists’ forecast of 8%.

The Yen strengthened to 106.12, firming up by as much as 0.7%. Against the Aussie, the dollar was weaker marginally at 0.7106.

Against Swiss franc, the greenback slipped more than 0.5%, with a unit of dollar fetching CHF $0.9206. The Loonie was little changed at 1.3416 a dollar, after falling to 1.3445 from an early level of 1.3378.


Leave A Reply

Your email address will not be published.