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Dollar Exhibits Strength

Dollar Exhibits Strength

The U.S. dollar exhibited strength against its peers on Friday amid weak data from Europe and China’s decision to not publish its growth target for the year.

An escalation in tensions between the U.S. and China after the latter said it is planning a new Hong Kong national-security law

The dollar index, which rose to 99.87, was last seen moving around 99.75, gaining nearly 0.4% over previous close.

The Euro was weaker at $1.0901, giving up nearly 0.5%. The European Central Bank’s April meeting showed the bank was “fully prepared” to provide even more stimulus as soon as June, in an attempt to support the economy amid the coronavirus pandemic.

The British Pound Sterling weakened to $1.2170 from Thursday’s close of $1.2220. Sterling was reacting to UK retail sales data and a report showing the country’s budget deficit to have widened to a record high.

retail sales volume in UK declined 18.1% in April. That was the biggest monthly fall on record. Economists had forecast sales to decrease 16% after falling 5.2% in March.

Against the Japanese currency, the dollar was little changed with a unit fetching 107.61 yen.

The Aussie was trading at US$0.6539, down from previous close of $0.6565.

Against Swiss franc, the dollar was up marginally with a unit fetching CHF 0.9714, compared with CHF 0.9705 Thursday evening.

The Loonie was weaker at 1.3991 a dollar, retreating from 1.3955, weighed down by weak retail sales data.

The Chinese currency Yuan weakened to 7.1304 a dollar, losing ground from 7.1154 after the Chinese government dropped setting economic growth target for the first time and placed job creation as top priority as coronavirus, or Covid-19, pandemic has ravaged the outlook.

At the annual session of the National People’s Congress in Beijing, Premier Li Keqiang said the country will face some factors that are difficult to predict in its development due to the great uncertainty regarding the Covid-19 pandemic and the world economic and trade environment.

Meanwhile, China’s decision to write a new national security law into Hong Kong’s charter has triggered fresh worries on U.S.-China relations.

Republican and Democratic U.S. Senators said on Thursday that they would introduce legislation to impose sanctions on Chinese officials involved in enforcing proposed security laws in Hong Kong.

The legislation would also impose secondary sanctions on banks that do business with entities found to violate the law guaranteeing Hong Kong’s autonomy.

The aggressive intent of the Congress with regard to the tone on China is due to China’s alleged role in covering up the initial stages of the coronavirus outbreak.

In another development, the U.S. Senate passed legislation that seeks to delist Chinese companies who don’t abide by U.S. accounting laws.

China has warned that it will safeguard its sovereignty, security and interests, and threatened countermeasures.

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