Trade concerns renewed on Thursday following the arrest in Canada of a top executive of Chinese tech giant Huawei. The US and the Japanese currency rose.
The dollar has already been under pressure as growing concerns about slowing U.S. growth sounded an alarm to many investors. However, the arrest of Huawei’s CFO increased safe-haven demand for the currency.
The dollar fell broadly earlier this week after a thaw in trade tensions between Washington and Beijing.
The US currency had enjoyed months of a beyond compare performance against its major traded rivals. This has changed since FED Chairman said last Wednesday that U.S. interest rates were nearing neutral levels.
Against a basket of six rivals, the dollar edged up 0.2%. The currency has fallen 0.4% this week but it is only 0.5% off a 17-month peak touched on November 12.
As investors grew cautious and pulled back from riskier assets the Japanese yen rose 0.4%.
Forex – Commodities – Trade concerns renewed lifting Yen & Dollar
The Canadian dollar fell as much as 0.6% to $1.3437.
The euro was slightly lower at $1.1328 after retreating from this week’s high of $1.1419 scaled on Tuesday.
Sterling held above a 1-1/2 year low on Thursday. Concerns on how a British Parliament vote on May’s Brexit deal next week would unfold prompted investors to remain cautious. Sterling was broadly flat at $1.2732 and just shy of a June 2017 low of $1.2659 hit earlier this week. Against the euro and the yen, the pound was flat at 88.98 pence and 143.72 yen respectively.
The Australian dollar fell more than one percent, demonstrating its vulnerability to a worsening trade conflict.
In commodities, OPEC agreed on Thursday a tentative deal to cut oil output without having decided a final quantity yet. Oil lost 3% in volatile trade during OPEC meeting.
Brent crude was down $1.41 to $60.15 a barrel at 1245 GMT, having hit a session low of $58.36. U.S. futures were down $1.38 to $51.51 a barrel. Both features have lost 30% in value this quarter alone.
Gold is around $1,235, having largely lost out to the dollar this year as a U.S.-China trade row escalated. Expectations that investors might turn to gold as a safe haven asset have been reduced. Gold has suffered from the all-encompassing strength of the dollar.
Investors favoring the dollar over gold has proved a double negative. Further, a stronger greenback makes gold more expensive for buyers with other currencies and dampens demand.
Sources: Reuters, CNN money, Bloomberg
PLEASE NOTE The information above is not investment advice.