Dollar strengthens as US-China tension becomes focus
Hong Kong’s benchmark stock index fell more than 5% sparking a shift to risk-off trading. Concern that China is tightening its grip on Hong Kong is causing speculation that tensions between US and China will worsen. The US dollar is trading higher than all G10 peers except the Japanese yen.
May 22, 2020
EUR/USD 1.0898 GBP/USD 1.2180 USD/CAD 1.4043 AUD/USD 0.6511 USD/JPY 107.6100 USD/CNH 7.1583 USD/ILS 3.5308 USD/MXN 22.9780 USD/CHF 0.9714 USD/INR 75.9550
The greenback strengthened against its G10 peers as tensions between China and the US heighten. The Bloomberg dollar index is up by 0.5%.GBPSpeculation that the BoE could be the next central bank to push rates to negative territory caused downward pressure on sterling. The British pound has been the worst performing G10 currency this quarter weakening almost 2%.EUREUR/USD broke through the 1.09 handle trading to a low of 1.0887. Minutes from the ECB’s meeting on April 30 showed that the central bank is concerned about scenarios becoming outdated as the virus situation evolves.CADUSD/CAD is above 1.40 as markets move to risk-off trading. The currency pair traded up to 1.4039 - the highest all week. Oil prices fell with July WTI crude futures 3.5% lower.ASIA/PACIFICThe Japanese yen is trading slightly stronger than the USD as investors move to safe haven assets. News that Japanese Finance Minister Aso and BOJ Governor Kuroda both pledged aggressive measures to fight the impact of the virus also supported the currency.
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