Dollar Extends Advance as Trade Tensions Escalate
The dollar extended gains against all its Group-of-10 peers after US tariffs on China came into effect and the latter announced measures in retaliation just moments later.
China proxies like the Australian and New Zealand dollars led declines, while the yen trimmed some of its earlier losses.
“When the deadline was reached with not only no agreement with the US but fresh action taken by China against US imports and Google, markets have taken the clear message that if there was a Trump-Xi call, it did not go well,” said Sean Callow, senior analyst at Intouch Capital Markets.
“It provides fresh support for the dollar, but the BBDXY 1,325 highs on Monday probably won’t be retested, because out of Canada, Mexico and China, two out of three isn’t a bad result”.
AUD/USD dropped 0.6% to 0.6187; NZD/USD lost 0.7% to 0.5591.
USD/CNH rose 0.2% to 7.3227.
USD/JPY gained 0.2% to 155.08 after rising as much as 0.4% earlier.
EUR/USD fell 0.5% to 1.0291.
Treasury 10-year yields held steady at 4.56%; US JOLTS data due Tuesday is being watched for further clues on the Federal Reserve’s policy path.
USD/CAD advanced 0.4% to 1.4487.
Trump agreed to delay 25% tariffs on Canada and Mexico for a month after both countries agreed to take tougher measures to combat migration and drug trafficking at the border.
Source : Bloomberg
