The dollar against the Euro breaks up
At the weekend the U.S. and China introduced a mutual tariffs, as promised earlier, marking a new stage in trade wars. In this case, trump once again called on American companies to find a replacement Chinese suppliers. Such comments inhibit expectations of a commercial transaction, despite the assurances of the parties on the progress in the negotiations.
In fact, the financial markets will develop as the trend of the strengthening dollar and the weakening of the Chinese yuan, which was formed last spring, with the beginning of trade disputes.
Monday morning offshore yuan opened near a record low at 1.1780, down more than 15% from the peak levels of March 2018. The people’s Bank of China, though holding back the official exchange rate, so as not to cause panic in the financial markets, but not in a hurry to fight the market. This policy of deterrence has received informal approval from the IMF, which last week said that he sees in the actions of the Chinese authorities signs of manipulating the exchange rate. It is a kind of carte Blanche for the NSC to act in a similar manner, and on.
The dollar – on the contrary, adds to the majority of competitors, as U.S. investors return capital to the country in an attempt to survive times of heightened uncertainty. As a result, the dollar index against a basket of major currencies rose to its highest levels since may of 2017, noting the sharpest weekly gain in 16 months.
The Euro, in turn, crossed an important psychological barrier – the mark of 1.10. Failure of the lows of August caused massive stop orders, which intensified the failure of the Euro to the dollar, sending the pair towards 1.0960 in the end of the day on Friday.
On Monday morning there has been some revival of buying EURUSD: this suggests that the battle for the mark of 1.1000 is still ahead. This week, planned out a number of important statistics from the Americas, Europe and other countries.
The weak performance of the United States can restrain the strengthening of the us dollar and potentially start a rollback of the dollar after the growth momentum at the end of the month. However, in the longer term draws attention to the strength of the upward trend of the dollar index.
With the return of market participants after the summer holidays, the current strengthening trend of the us currency may gain even greater development, especially if you will receive additional recharge from the tightening of trade rhetoric and a growing concern around global growth.
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