US-China trade stand-off leads to fall of American dollar


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US-China trade stand-off leads to fall of American dollar

The unending trade volatility between the United States and China has affected the steady rate of the American dollar. On Friday, 24th May, the dollar came crashing to a weekly low, after nearly two years of highs. In addition to this, the unending worry that the Federal Reserve was on the verge of bringing the key interest rates down also contributed to the dollar's rate falling.

The dollar was down to about 105.59 against the yen, while its Australian counterpart was trading at 0.68, gaining about 0.2 per cent. The Euro neither gained nor lost and was trading at around 1.15 against the dollar. The brewing activity in Europe – including the upcoming European Union elections – contributed to the Euro's problems in the region.

Speaking about the dollar's fall, Daiwa Securities' senior currency analyst Yukio Ishizuki said, as reported by Reuters, "Markets are pricing in a rate cut as damage from the trade tension is thought to be larger than imagined, though the Fed hasn’t talked about it at all."

He added, "The (Donald) Trump administration is expected to put a fair amount of pressure on the Fed from now on. Investors are thinking about a rate-cut scenario without the Fed giving in to that."