Investing.com – Even if the u.s. dollar reached on Monday its highest level in four months against the chinese yuan, the greenback has been put to the test while investors have largely sought the safe-haven currencies such as the yen and the swiss franc.
“The reopening of the trade war, the sino-american was a surprise. We believe that an agreement will be entered into (the third quarter), but until then, investors seem to want to play the caution,” said Chris Turner, head of strategy of currency to ING.
While the trade dispute, sino-american intensified as Beijing reacted to the increase in u.s. duty on chinese goods by increasing the tariffs on u.s. imports to 60 billion dollars, the chinese yuan lost even more ground, dipping to its lowest lows since four months against the greenback. The USD/CNY has risen 0.8% to 6,8792 at 16: 35, an unprecedented level since 3 January.
The australian Dollar has experienced a similar fate, down 0.5% against the greenback because of its correlation with the chinese economy.
But with the large declines in u.s. stocks, the dollar was under pressure as investors sought shelter in assets that shelters such as gold, the yen or the swiss franc. USD/JPY has experienced a decline of 0.8% to 109,09, near the lows of the 1st of February, while USD/CHF has lost 0.6%, reaching its lowest level in over a month 1,0054.
The US dollar index, which measures the greenback’s strength against a basket of six major currencies, declined 0.2%, 96,91, after having reached its lowest level since 18 April earlier in the session.
In the absence of economic reports major of the two sides of the Atlantic, a weak dollar has been beneficial to both the euro and the british pound.