The dollar may suffer due to disagreements in the US and China
The U.S. currency came under strong pressure early in the week and in early trading on Tuesday. Reaching lows of late July, the USD index moved to the defense, sending the Euro and pound in the red zone and actively moving to the North in tandem with the Japanese yen.
At first glance, the reaction of the stock markets and currencies to the introduction of new tariffs trump may seem strange. Before, for the past several months, American received unconditional support at any sign of escalation of trade disputes with America’s trading partners.
Does today’s markets, the dollar lost an important bullish factor and will no longer be in demand in the future “exchange of courtesies” between Beijing and Washington. Unlikely. In this context, the bullish potential is still present, just at this time a development was already priced in.
A growing concern for dollar bulls should cause symptoms of the emergence of fears for the deterioration of health of the us economy due to the further erection of barriers between countries. While such indications we are seeing, but in the future, markets will be closely tracking all incoming US economic statistics.
At this stage, the potential dollar weakness seems limited due to the imminent fed meeting later this month, which with almost 100% probability will be increased rate.
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