The dollar fell as rising US-China trade tensions and growing bets on a U.S. interest rate cut sapped investor demand.
The dollar has suffered a setback after the latest escalation of the U.S.-China trade. Analysts fear this tension could tip the global economy into recession. Those fears have grown as recent data have pointed to a global economic slowdown. Chinese factory inflation slowed in May and Fed officials have become increasingly cautious. That has fuelled expectations of U.S. rate cuts, a shift from a few months.
The dollar slipped as much as 0.2% against the pound, taking its losses to nearly 1% so far this month.
The dollar’s latest drop comes as U.S. President Donald Trump accused the European Union of devaluing the euro zone’s single currency. He also renewed his attacks on the Fed and its monetary policy. That has raised concerns that the trade tensions between the United States and the rest of the world will only intensify.
START TRADINGForex – Growing bets on US rate cuts – Dollar fells
Investors focus is now on the Fed’s next policy meeting on June 18-19 and what kind of signals could offer on the direction of monetary policy.
The pound rose towards a three-week high after Britain’s main opposition party said it would try to introduce parliamentary legislation to prevent a no-deal Brexit. The pound was up 0.2% at $1.2740, close to a three-week high of $1.2763 hit on Friday. It was flat against the euro at 89 pence. Sterling, which has been confined recently to a range of $1.26-$1.28, found some relief on Tuesday after British wages in the three months to April rose faster than expected.
The euro was broadly steady at $1.1360 and in close reach of a three-month peak of $1.1348 scaled on Friday. The single currency was little affected by U.S. President Donald Trump’s accusation that Europe was devaluing the euro. The common currency has gained roughly 1.4% against the dollar so far in June.
Gold prices rose on Wednesday after hitting a one-week low in the previous session, as worries over U.S.-China trade war flared up. The trade tension curbed risk appetite and increased the appeal of safe-haven bullion.
Spot gold was up 0.7% at $1,335.34, as of 0724 GMT. It fell to its lowest since June 3 at $1,319.35 in the previous session..
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money