Trump’s China threat and concern about sinking economies help lift dollar after 6 days of losses
The US dollar gained as did the Swiss franc and Japanese yen on safe haven buying. Financial markets showed optimism earlier this week on expectations the world’s economies would be opening after weeks of COVID-related lockdown. Today, investors seem to have second thoughts and are selling risk positions before the weekend. Trump threatened China with retaliatory measures due to China’s handling of the COVID outbreak triggering concerns of a renewed trade war.
May 1, 2020
EUR/USD 1.0981 GBP/USD 1.2522 USD/CAD 1.4022 AUD/USD 0.6448 USD/JPY 106.72 USD/CNH 7.1273 USD/ILS 3.5057 USD/MXN 24.3934 USD/CHF 0.9616 USD/INR 75.1012
The dollar has generally benefited from the outbreak of the novel coronavirus since the middle of March. The safe haven status of the US dollar, as compared to most currencies, has resulted in a steady flow of buyers of USD assets.
Weak economic data has sapped much of the positive sentiment for a post-COVID rebound from earlier in the week. The Trump administration has made threats of retaliation against China regarding COVID, leading some to fear a renewed trade war.GBP
The British pound is weaker on overall US dollar strength as well as data showing that UK manufacturing fell in March to its lowest level in 30 years.EUR
The euro continues to march higher after breaking through some key technical levels. Most of Europe is closed for the May 1 holiday so trading has been thin. Bullish sentiment has carried the euro to a stronger position, however, safe haven US dollar buying may help the greenback before the weekend.CAD
The Canadian dollar weakened on concerns about a potential showdown between the US and China as Trump threatens retaliation on China’s handling of the COVID outbreak.
Oil is stronger today on news that more oil producing countries are cutting production.ASIA/PACIFIC
The Chinese renminbi weakened significantly to 7.13 on threats from the Trump administration of retaliatory measures. Trump is accusing China of mishandling the response to COVID, but has thus far taken no action.
Most Asian currencies lost ground due to an overall strong US dollar and the significant weakening of the renminbi.
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