Forex – dollar retreats, risk assets boosted by Trump

© Reuters. – The dollar was broadly lower Monday in early Europe, after the decision of the american president Donald Trump to delay the imposition of customs duties on imports from China has caused a spectacular recovery in risk assets.

The dollar index, which measures the greenback against a basket of currencies, declined slightly to 96,257 at 03h20 (08: 20am GMT), after ending Friday’s session at 96,40.

The greenback has clearly declined in asian trading, chinese equities recorded their best day in over three years, while the yuan gained 0.2%. A truce in the trade of american-chinese would give a boost to the chinese economy, and the signs emerging of a truce boosts not only the chinese assets, but also all currencies and correlated actions in China.

The chinese news agency Xinhua has warned that there could still be problems with the agreement, which has slightly cooled down the spirits.

As such, the dollar has not only fallen 0.2% against the Aussie and the kiwi in Asia, it has also weakened against the yen, reflecting the growing importance of China as a market for japanese companies as well.

The euro has also reached a high of two weeks against the dollar, in the hope that a truce can give new life to a stagnant economy in the euro area.

However, the concerns are obvious of their central banks about short-term prospects continue to blur the outlook for the two currencies, the officials of both countries have encouraged the hopes of new stimulus measures last week.

“Even if the Fed is in pause for the time being, the ECB and the BoJ are currently faced with the challenge of trying to get away from their compromise monetary extreme,” said Marc Ostwald, strategist at ADM ISI in London.

A trigger bullish of the euro this week could be a result of the preliminary reading of gross domestic product-u.s. for the fourth quarter in the United States. Ostwald of ADM ISI has declared that the forecast of 2.5% growth could be disappointing, given the numbers of very weak durable goods orders and retail sales in December.

Like this post? Please share to your friends:
Leave a Reply