Investing.com – The u.s. dollar remained stable in the face to a basket of currencies on Wednesday, keeping the gains of the previous session, concerns about the intensifying trade tensions between the United States and China has pushed investors to take refuge in assets shelters.
The weakness of the euro has also helped to support the greenback, the uncertainties surrounding the outlook for the economy and the political future of the euro zone have weighed on the single currency.
The dollar index, which measures the currency against a basket of six major peers, was virtually unchanged at 97,820 at 09: 30, having closed up 0.3% the previous day. The index is trading at about 0.5% of a two-year peak of 98,371 reached Thursday, and is still up 1.8% for the year.
Investors remain focused on the trade war between the United States and China. China is willing to use rare earths to get back in the trade war with the United States, according to the chinese media, which would further exacerbate the tensions between the two largest economies in the world.
The american president Donald Trump said Monday that Washington was not yet ready to conclude an agreement with China.
The rise in risk aversion has boosted demand of US Treasury bond, which has brought the rate of return of 10 years to their lowest levels since September 2017. Bond yields fall as prices rise.
The euro remained stable at 1,1162 after the close of the previous session, down almost 0.3%, a level close to its lowest level of the past two years to 1,1105 reached Thursday.
The leaders of the European Union are about to begin to fill a number of high-ranking positions in the EU, the head of the European Commission, the European Central Bank.
“The reason why we have witnessed the fall of the euro is that the european zone in particular has been threatened, and worried by the concerns of commercial,” said Twidale Rakuten.
“Because of this, we also had the european elections, so there is a lot of political instability in Europe”, he added. “This puts the pressure on the currency.”
The vice-Prime minister of italy Matteo Salvini, the League’s far-right has triumphed on Sunday in the european elections, said that the European Commission could impose a fine of 3 billion euros to Italy for breach of EU rules on government debt and deficit, a comment that has weighed on the single currency.
The dollar was slightly down against the yen and the swiss franc to 109,23 and 1,0063, respectively.
The yen and the swiss franc are the currencies of refuge traditional, which tend to attract demand in times of geopolitical tensions or financial.
–Reuters contributed to this report