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Dollar Stands Its Ground As U.S.-China Tensions Grow


Thursday, 28 May 2020 09:09 WIB

DOLLAR


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The dollar held its own on Thursday as rising Sino-U.S. tension put crushing pressure on the Chinese yuan and proved a counterweight to optimism about the coronavirus recovery.

The escalating war of words between the world’s two biggest economies also spilled over to the Australian and New Zealand dollars, as a far more cautious mood holds in currency markets compared with the ebullience rallying stocks.

Hong Kong is the newest flashpoint, with U.S. Secretary of State Mike Pompeo saying on Wednesday that China’s plan to impose laws there was “only the latest in a series of actions that fundamentally undermine” the city’s autonomy and freedoms.

The Chinese yuan, a barometer of U.S.-China relations, hit a record low of 7.1966 per dollar in offshore trade overnight and held close to that level on Thursday at 7.1805.

The Aussie and kiwi backed off two-month highs hit in the London session and were becalmed, even as the re-opening of the world’s economies kept stock markets rallying. The Aussie was last at $0.6621 and the kiwi at $0.6188.

Elsewhere, the dollar was marginally firmer against the Japanese yen, at 107.83 yen per dollar, and a touch weaker on the euro and pound.

Against a basket of currencies it was steady at 98.863, a fraction above a two-month low hit overnight.

The euro rose to an eight-week peak of $1.1031 on Wednesday, climbing above its 200-day moving average, after the European Union’s executive unveiled a 750 billion euro plan to prop up the bloc’s virus-hit economies.

It pulled back as doubts over the way forward in achieving the plan emerged and last sat at $1.1021. The pound was at $1.2263.

Source : Reuters


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