Dollar near recent highs on U.S.-China trade uncertainty

by Jonathan Adams

The dollar was near recent highs as uncertainty over the U.S.-China trade war, while the New Zealand dollar slid to a 4-year low

The dollar held near recent highs on Monday as uncertainty over the U.S.-China trade war encouraged investors to move into the safety of the greenback, while the New Zealand dollar slid to a 4-year low after business confidence tumbled.

Traders have mostly shrugged off news that the Trump administration was considering de-listing Chinese companies from U.S. stock markets after the reports were hosed down by Treasury officials, but investor sentiment remains fragile.

Worries that negotiations between China and the United States will not lead to a trade deal, and deepening political uncertainty in the United States after the start of an impeachment inquiry into President Donald Trump, have unnerved investors and boosted demand for dollars.

The U.S. currency, measured against a basket of rival currencies, rose 0.1% to 99.169 in early European trade, while against the euro it was slightly higher at $1.0929.

The dollar earlier this month hit a more than 2-year high of 99.37.

ING analysts said in a research note that were there better stories overseas, they suspect the dollar might be a little weaker right now, but there are not (industrial production numbers are still plumbing the depths in many countries) and thus the dollar is holding its gains.

New Zealand’s dollar dropped 0.6% to as low as $0.6249 , its weakest since 2015, after a survey showed business sentiment weakening to an 11-1/2 year low in September, strengthening the case for a reduction in interest rates.

Ulrich Leuchtmann, a strategist at Commerzbank said, they are seeing from the positioning data that people have increased shorting of the Kiwi. A lot of people are jumping on the train again, he added.

In Australia, forecasts for a rate cut on Tuesday have risen – markets are pricing a better than 75% chance the Reserve Bank of Australia will reduce its cash rate for a third time this year.

The Aussie fell 0.2% to $0.6753.

Euro zone inflation numbers for September were largely weaker than expected, but the euro was little moved.

The Japanese yen gave up earlier gains and was last flat on the day at 107.92 yen per dollar.

Sterling rose 0.2% to $1.2316, recovering some of last week’s losses after investors took fright at the standoff in Britain’s parliament over Britain’s exit from the European Union.

Traders are expecting a lull in trade-war headlines as China takes a week-long holiday from Tuesday, which marks the 70th anniversary of the People’s Republic of China.

China’s offshore yuan slipped slightly to 7.143 yuan per dollar.

This article is for information purposes only.
Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.

Related News

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Know more