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Dollar Exhibits Weakness As Dismal Economic Data, Trade Tensions Weigh

Dollar Exhibits Weakness As Dismal Economic Data, Trade Tensions Weigh

The U.S. dollar stayed stayed weak right through Friday’s session, weighed down by dismal economic data and rising U.S.-China trade tensions.

On the trade front, the U.S. government has changed rules to block shipments of semiconductors to Chinese tech giant Huawei Technologies.

The Commerce Department said in a release that it was changing an export rule to “strategically target Huawei’s acquisition of semiconductors that are the direct product of certain U.S. software and technology.”

The data from the Commerce Department showed retail sales in the U.S. plunged 16.4% in April, after falling by a revised 8.3% in March. The fall in April was significantly sharper than an expected 12% drop.

A Federal Reserve report showed a record drop in U.S. industrial production in the month of April, as the COVID-19 pandemic led many factories to slow or suspend operations throughout the month.

The Fed said industrial production plummeted by 11.2% in April after tumbling by a revised 4.5% in March.

Economists had expected production to plunge by 11.5% compared to the 5.4% nosedive originally reported for the previous month.

The dollar index, which dropped to a low of 100.08 around mid morning, recovered to 100.40 later on in the day, cutting down its loss to just 0.08%.

Against the Euro, the dollar weakened to $1.0821, from $1.0806 Thursday evening.

The Pound Sterling shed more than 1% against the dollar, weakening to $1.2106, from $1.2231. The British currency slipped after EU’s Brexit negotiator Michel Barnier commented the third EU-UK negotiating round was “disappointing.” Meanwhile, the British cabinet has stated that it would not be extending the Brexit transition deadline beyond December..

The Japanese Yen turned weak after staying firm early on against the dollar, but recovered some lost ground late afternoon. The Yen was last seen trading at 107.14 a dollar, after having slipped to 107.43 a dollar.

Against the Aussie, the dollar strengthened to 0.6417, firming up by about 0.7% from Thursday’s close of 0.6462.

The Swiss franc was stronger at 0.9719 a dollar, while the Loonie dropped to 1.4112 a dollar from Thursday’s 1.4050 a dollar.

The material has been provided by InstaForex Company – www.instaforex.com