Trade friction sent US dollar to one-month high as concerns grew that the China-U.S. conflict was fast turning into a technology cold war. Economic and political uncertainties swept through Europe and Asia, pinned down most major currencies like the euro and the yuan.
The rhetoric between Beijing and Washington remained fierce. Besides, Brexit worries and gloomy data from Germany and the euro zone added to the nerves. Investors worry that the U.S.-China trade dispute could see a further sharp escalation with no signs of a resolution as yet.
An increasing number of investors now seem to be prepared for prolonged period of trade conflict.
Worries over German manufacturing and deepening concerns over Brexit and European parliamentary elections have broadly curbed risk appetite and sent investors to perceived safe-haven assets. Investors see the greenback as a relative safe haven because of its pre-eminence in the global economy. Also, there is an extra cushion of having some of the highest interest rates in the developed world.
The dollar was up fractionally on the euro at $1.1130. The greenback touched a 1-month high on a basket of currencies at 98.262, its highest since April 26, when it hit a two-year peak of 98.33. If it stays the course, the dollar will be on track for a fourth consecutive month of gains
START TRADINGForex – Dollar climbs to one-month high amid trade friction
The euro dipped to its lowest in a month at $1.1129, down 0.2 percent on the day, before recovering slightly to $1.1135.
Constant trade friction saw the safe haven yen in demand again as the dollar dipped to 110.16 yen. The Japanese curency was 0.1% firmer at 110.23 to the dollar, having pulled back from a two-week low of 110.675 plumbed on Tuesday. It stayed away from the week’s top of 110.67. The Yen also rose 0.2% against the euro and added 0.5% versus pound. Persistent U.S.-China trade fears fanned risk aversion, lifting the safe-haven Japanese currency.
The sterling had troubles of its own as it hit a 4-1/2-month low of $1.2603 as it suffered its ninth drop in the last 10 days. Sterling was within a sliver of slipping below $1.26 for the first time since early January. The British currency is also set for its fourteenth straight day of losses against the euro. This is its longest losing streak in the 20-year history of the single currency. British Prime Minister Theresa May came under intense pressure after her latest Brexit gambit backfired. She fuelled calls for her to quit.
Oil prices added to losses suffered overnight after an unexpected build in U.S. crude inventories compounded investor worries about demand. U.S. crude was last down 48 cents at $60.94 a barrel, while Brent crude futures lost 57 cents to $70.41.
Gold prices eased on Tuesday after touching a more than two-week low in the previous session. Spot gold was a bit higher at $1,274.73 per ounce.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money