Dollar lower as tension between economic giants rises

28 May, 2020

The U.S. Index, which measures the dollar strength against a basket of six currencies was lower on Wednesday’s session. The index ended the session at 98.93 on growing optimism about a global recovery from the COVID-19 pandemic on news of a potential vaccine that helped investors dump safe-haven assets.

Regarding U.S Sino news, the U.S. Secretary of State Mike Pompeo said 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.

While on Tuesday the U.S. President Donald Trump’s economic adviser said China’s plan for national security legislation on Hong Kong was “a big mistake” and pledged Washington would pay expenses of U.S. companies that wanted to move out of the territory or China.

In economic news, the U.S. Initial Jobless Claims which measures the number of individuals who filed for unemployment insurance for the first time during the past week is due to be released later today, expectations show that 2.1 million will file this week falling from the previous one of 2.4 million.

Moreover, U.S. Pending Home Sales for April which measures the change in the number of homes under contract to be sold but still awaiting the closing transaction, excluding new construction is expected to fall by 15 percent better than the previous reading which showed a 20.8 percent drop.

Over in Europe, the Common currency traded higher on Wednesday’s session to settle at 1.1004 EURUSD. The euro was higher after the European Union's executive unveiled a 750 billion euro plan to prop up the bloc's virus-hit economies.

Moreover, the Ifo institute said German exporters recovered somewhat in May from a "catastrophic" April. moreover, Germany’s GDP for the first quarter of 2020 came in line with expectations dropping by 2.2 percent.

The Great British Pound was lower versus its counterpart, the U.S. Dollar, to settle at 1.2258 GBPUSD.

Despite its large gains on Tuesday’s session, Brexit talks have yielded insignificance progress so far. the final round of negotiations is set for next week before a conference in June to assess progress before the year-end.

Regarding Safe-Haven assets, the Greenback rose against the Japanese Yen, to end the session at 107.70 USDJPY. moreover, the Greenback was higher versus the Swiss franc to trade at 0.9680 USDCHF.

The Precious Metal Gold relatively flat versus the U.S dollar, finishing the session at 1709 per ounce pressured by the risk appetite that flared across markets from the reopening of the U.S. economy from coronavirus-imposed lockdowns.

Elsewhere in Canada, the Loonie dollar edged higher versus the Dollar, finishing the session at 1.3748 USDCAD. In Asia, the Aussie Dollar finished the session lower at 0.6622 AUDUSD. Moreover, The Kiwi Dollar fell on Wednesday’s trading session, to finish at 0.6187 NZDUSD.

Cryptocurrencies ended the session higher, with Bitcoin finishing lower to settle at 9146 BTCUSD while Ethidium Finished at 204 ETHUSD.


Source  
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