By Geoffrey Smith
Investing.com — The dollar started the week slightly down in Europe, although volumes are modest, depressed by the holidays in the United Kingdom and the United States, on a background of underlying tension between the United States and China.
Has 11: 35 am, the dollar index, which tracks the greenback against a basket of currencies of developed markets, declined by 0.1% to 99,812.
However, the kiwi and the swiss franc – two currencies at opposite ends of the spectrum of risks – were more bad students. USD/CHF rose 0.1% to 0,9720.
The weekend of Memorial Day in the United States was largely offset by the flow of information from this country, but the dollar fell back to its highest level in march against the chinese yuan after the pro-democracy demonstrations have again erupted in Hong Kong, causing a strong reaction of the local security forces.
The dollar was at 7,1527 yuan on the offshore market at 11: 35 am, up 0.1%.
The euro has been weak after data confirming that Germany, the largest economy of the monetary union, has fallen into recession in the first quarter, the gross domestic product having contracted by 2.2%.
Analysts at Nordea said in an article in a weekly that the euro has not yet evaluated the benefits of the franco-German proposal for joint issuance of debt and fiscal transfers are modest to finance the stimulus funds of the EU against the coronavirus – which would be a big step towards a arm central tax at the european level.
Andreas Steno Larsen, Nordea, has argued that the lack of enthusiasm for the euro reflected the obstacles that the plan franco-German is always faced with : although the european Commission is expected to approve an important strategic document later in the week, four countries – the netherlands, Austria, Sweden and Finland – have detailed their opposition to a document jointly drafted this weekend.
Despite this, the stagnation of the euro below$ 1.09 in “let a good enough risk/reward in playing the chance of an outside breakthrough to the proposal via structures long EUR/USD in the space of options,” they argued.
The pound sterling, meanwhile, is stable but under pressure from the prospect of the Bank of England reduced official interest rates below zero at its next policy meeting in June.
“The pound does not do well with a double deficit underlying the perpetual and a very clear carry-negative”, wrote Steno Larsen.
The index of the pound sterling has fallen 2.2 percent last week and begins the week at a level close to its lowest level in the last two months, while GBP/USD was 1,2171 $, the same level as Friday.