The Dollar is retreating in the face of rising economic optimism

By Peter Nurse

The dollar decreased at the beginning of the european session on Monday as fewer investors seek the shelter in a context of growing optimism about the global economic recovery and that the us president, Trump offers a measured response to China’s decision to tighten its control over Hong Kong.

At 11: 30, the us dollar index, which tracks the greenback against a basket of six other currencies, was $ 98,037, down 0.3%, after touching a low of 11 weeks 97,877 earlier Monday. USD/JPY has dropped 0.2% to 107.53.

“Market participants believe that the worst of the health crisis, financial and economic is now behind us. This supports the price of raw materials… and if we have past the worst, then commodity currencies tend to do well and the u.s. dollar in bad shape in the early stages of a recovery,” said Joe Capurso, business analyst foreign exchange at Commonwealth Bank of Australia, to CNBC.

The AUD/USD pair jumped from 1% to 0,6734 and the pair NZD/USD rose 0.5% to 0,6232.

Supporting the tone of risk-taking, an official investigation from the chinese companies showed that manufacturing activity in the country grew at a slower pace in may, but that the dynamics in the sectors of services and construction has accelerated.

In addition, the president Trump has decided not to put an end to the first phase of the agreement, the United States trade with China when he presented on Friday its response to the chinese law on national security to Hong Kong and Macau, although it has promised to put an end to the special status of Hong Kong.

USD/CNY was trading at 7,1176, down 0.2%, the yuan is rising slightly.

However, Goldman Sachs sees the yuan falling to its lowest level since 2008 over the next three months, in a context of uncertainty on the us policy towards China.

Goldman sees the yuan falling to 7.25 per dollar over the next three months before recovering towards 7,15 per dollar in six months and 7 per dollar in a year. This is an increase compared to the objectives 7.15 per dollar, 7,05 and of 6.90 previously.

The euro continued to strengthen on Monday, after having been stimulated by the recovery plan of the EU last week.

Markets are also awaiting a meeting of the european central Bank on Thursday, during which it is expected to increase its asset purchases of around € 500 billion to $ 1 250 billion euros.

EUR/USD is trading at 1,1124, an increase of 0.2%, after rising 1.8% last week.

The british pound is also rising, the United Kingdom has eased measures to lock that last for months. The government has announced the resumption of competitive sport starting on Monday.

A new round of negotiations on the Brexit will begin on Tuesday, before the european summit on 18 and 19 June, during which London will rule on the request for an extension of the transitional agreement.

GBP/USD is trading at 1,2401, up 0.5%, after rising 1.7 % last week.

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