US Dollar threatens upside breakout as trade tension jitters

by   |  VIEW 609

US Dollar threatens upside breakout as trade tension jitters

On Wednesday, the 29th of May 2019, the American dollar had been hovering near multi-year high at 98.17 at the days market wrap-up, a closing level last seen during May 2017, while investors had been hurrying on to safe-haven currency and commodities.

As Sino-US trade spat escalates further on Wednesday (May 29th), after Chinese media had strongly implicated that Beijing were going to curb rare earth element export, investors were seeking safety on government bonds, Japanese Yen and Swiss Franc, leaving the riskier assets behind.

Nevertheless, on Wednesday’s (May 29th) market, an upsurge of US dollar was largely catapulted by strong sell-off of riskier currencies all over the world, while fears of an escalated trade war had led to steep sell-off of emerging market currencies likes of Brazilian Real and South African Rand.

Meanwhile commodity related currencies such as Australian dollar and New Zealand dollar had been found struggling to hold on to their footings, amid strong bearish momentum of commodities such as copper, over global economic slowdown fear.

While this report was being prepared, May 29th, GMT. 21.00, at the closure of US trading hours, US dollar index (DXY), measured against a basket of six major currencies on an average, had wrapped up the day 0.23 percent higher at 98.17, while Chinese Yuan had fallen to 6.9130 against US dollar, just a notch shy of 5½ month lows.

The broad-based greenback of US Dollar in context of a strong sell-off tendency among the investors all over the world, Japanese Yen and Swiss Franc were little changed at 109.65 and 1.0073 respectively. While Euro and GBP had shed 0.27 and 0.20 percent respectively against American dollar, hovering closer to to their multi-month-lows at $1.1330 and $1.2626, Canadian dollar breached a five-month low to C$1.3547 after Bank of Canada had kept interest rate unchanged at 1.75 percent.

Meanwhile, adding that the market could experience further muffled momentum against a robust American dollar amid strong sell-off of major and emerging currencies, a senior market strategist at Raymond James in Memphis, Tennessee, Ellis Phifer said, “We are not going to get out of this choppying trading”.