King-sized American dollar rattles commodities & currencies


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King-sized American dollar rattles commodities & currencies

On Thursday, the 1st of August 2019, American dollar hit its highest level in more than two years, throwing a flurry of currency majors and commodities off balance, after Federal Reserve had committed itself to a stronger US dollar by putting up a hawkish rate-cut show yesterday (July 31st).

In point of fact, after lowering benchmark interest rate by 25-basis points on Wednesday (July 31st), reiterating the scale of strength lying underneath US economy with a 50-year low unemployment figure and a financial system heavily insulated from global slowdown risk alongside geopolitical grudges, Fed Chairman Jerome Powell had been quoted saying that latest rate-cut should not be contemplated as a beginning of a long series of rate cut, instead he dubbed it as a “mid-point policy adjustment,” which started off an upscaled rally of American currency and muzzled momentum of most of the emerging market currencies alongside currency majors likes of euro, sterling, Australian dollar and New Zealand dollar, while a 7 percent slump in crude oil futures’ prices had dragged oil-dependent Canadian dollar down to a nearly one and a half month low to $1.3210 on Thursday’s (August 1st) market round off.

Meanwhile, Trump’s Thursday’s (August 1st) tweet regarding a tariff hike on $300 billion worth of Chinese imports, sapped outlooks of Chinese economy dependent Australian dollar, which posted its tenth straight day of plunge and dropped by 0.69 percent to a record low $0.6796, a level never seen since the era of great financial depression, while New Zealand dollar seemed to be more resilient, though posted a plunge of 0.21 percent to $0.6541 on Thursday’s (August 1st) market closure.

Besides, the British currency fell 0.28 percent to $1.2110 against its American counterpart. Nonetheless, safe-haven currencies such as of Japanese Yen and Swiss Franc posted heavy gains followed by a rekindled jittering over trade, as investors were bracing for a retaliation from Beijing and seeking safety on safe-haven currencies and commodities, bolstering an American dollar further by ditching off risk-prone assets likes of black gold.

On Thursday’s (August 1st) market closure, the US dollar index (DXY) measured against a fistful of major currencies on an average fell by 0.18 percent to 98.40 after rising as much as 0.40 percent to 98.93 during late-morning US trading hours, a level last seen on May, 2017, while amid a flight-to-safety response of the investors, spot gold gained 2.33 percent to $1445.20 an ounce, Japanese Yen surged 1.31 percent to $107.33 Yen against US dollar and Swiss Franc smashed a gain of 0.39 percent to wind off the day at $0.9900.