Forex Signals Dollar finds footing – FxPremiere FX Signals.
SINGAPORE (Reuters) – The dollar crept off milestone lows against other majors on Thursday, and held on to gains against the yuan, as heightened Sino-U.S. tension put a bit of caution into currency markets.
The Australian dollar pulled back from a 15-month peak and was steady at $0.7143, while the kiwi retreated slightly from a six-month top to sit at $0.6657.
Volumes were lightened by a public holiday in Japan.
Still, the lift to the dollar was pretty modest. It edged off a four-month low against a basket of currencies USD to 94.980.
The safe-haven Swiss franc found support near a four-month top at 0.9287 per dollar, while the yen was rangebound at 107.15 per dollar.
U.S.-China ties have worsened sharply this year over issues ranging from the coronavirus and telecoms-gear maker Huawei, to China’s territorial claims in the South China Sea and clampdown on Hong Kong.
The U.S. State Department said the Chinese mission in Houston was being closed “to protect American intellectual property and Americans’ private information.”
Chinese state media said on Thursday that the move was a political ploy ahead of November presidential elections, and one source with knowledge of the matter told Reuters that China was considering closing the U.S. consulate in Wuhan in response.
“It seems escalation is inevitable in the near term,” said Commonwealth Bank of Australia currency analyst Joe Capurso. “The upshot is CNH is likely to weaken further and broader currency volatility increase.”
Elsewhere the South Korean economy entered recession and exports posted their worst plunge since 1963.
Investors are also expecting weekly U.S. jobless claims, due at 1230 GMT to hold relatively steady.
EUR/USD to $1.21 by Year End as Covid Crisis, Stimulus Worries to Hurt Dollar
The euro racked up gains on Wednesday, and could reach $1.21 against the dollar by the end of the year as the greenback faces a rocky few months amid rising cases and stimulus worries, analysts said.
EUR/USD rose 0.36% to $1.567.
“The ‘one step forward, three steps back’ style of U.S. reopening has exposed those weaknesses to the market, undermining the USD,” TD FX analyst Mark McCormick (NYSE:MKC) said.
The struggles in the dollar against the euro have been compounded recently by signs that EU members are warming up to the idea of forming a fiscal union following their historical €750 billion coronavirus package agreed yesterday.
The pandemic aside, the dollar also faces headwinds, albeit short-term, from potential delays to fiscal stimulus, ING said. “A possible delay to the U.S. fiscal stimulus (Republicans reportedly are working on their own version, trying to bypass President Trump’s plan to include payroll tax cuts in the stimulus) is another in a series of short-term blows to the US dollar.”
Senate Majority Leader Mitch McConnell on Tuesday reportedly said he does not expect that the bill, which includes new money for the paycheck protection program, and seeks to extend the program by at least six months, would be rolled out within the next two weeks. Forex Signals Dollar finds footing.
With Congress set for a recess in August, time is running out for lawmakers on Capitol Hill to resolve their difference over the coronavirus aid bill.
The Dutch bank said the path to gains for the single currency is more likely amid dollar weakness ahead.