The Dollar is unloved; the feeling remains optimistic

By Peter Nurse

The dollar has few friends in the european session on Tuesday, as the tone remains generally optimistic about the recovery in the world, despite the heightened concerns about the tensions between the United States and China, and civil unrest in many american cities.

Was 11.10 am, the us dollar index, which tracks the greenback against a basket of six other currencies, was $ 97,477, down 0.3% to its lowest level since mid-march. USD/JPY rose 0.2% to 107,77.

Earlier in the day on Tuesday, the australian central bank has maintained its goals of interest rate and yield unchanged, as a result of early signs of recovery.

“It is possible that the depth of the slowdown is less important than expected,” said the governor of the reserve Bank of Australia, Philip Lowe, in a press release.

The australian dollar, often seen as a bet indirectly on the strength of the chinese economy, rose 0.8% to $ 0,6849$, after reaching its highest levels since the end of January.

This follows a rebound in manufacturing activity in the United States from a low of 11 years in may, fueling the narrative of an economy on the rise.

This has overshadowed the violent protests ongoing in many cities in the us about the police brutality, as well as of the renewed hostility between China and the United States regarding the treatment by China, the special status of Hong Kong.

“There are a few potential hot spots such as the protests of american and tensions between China and the United States. But, overall, the market is still moderately to the risk,” said Kyosuke Suzuki, director of forex at societe generale (OTC:SCGLY).

The euro has maintained its recent strength on Tuesday, after having been stimulated by the recovery plan of the EU last week, and the approach of the meeting of the european central Bank on Thursday, where it is expected to increase its asset purchases of around 500 billion euro to reach 1.25 trillion. It is also supported by reports of an additional stimulus package of the German government, scheduled to be debated Tuesday by the cabinet of chancellor Angela Merkel.

EUR/USD has reached 1,1185$, up 0.4% to a high of 2 and a half months.

GBP/USD is trading at 1,2559$, to a high over a month, while the United Kingdom has relaxed the measures to lock that last for months, and that a new round of negotiations on the Brexit begins Tuesday.

The requirements of the EU on “fair conditions of competition remain the main obstacle,” said the analysts of the Danske Bank, “and we continue to not expect a breakthrough before the important deadline of 1 July, when the United Kingdom and the EU must decide whether it is appropriate to extend the transition period”.

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