Dollar Holds Nearly 2019 High as Trade Tensions

Dollar held nearly its 2019 high as U.S.-Sino trade tensions and worldwide development concerns strengthened the greenback’s safe-haven appeal, however, the euro and the British pound were damage by troubles of their own.

Dollar bills.

Investors are concentrating on high level trade talks in China this week where Washington is anticipated to keep pressing Beijing on long-standing demands that it make sweeping structural reforms to keep American corporations’ intellectual property, to end policies for forcing the transfer of technology to Chinese firms, and curb industrial subsidies.

“The dollar is benefiting from the investor nervousness around the trade talks,” said Sim Moh Siong, currency strategist at Bank of Singapore.

“Beyond its safe haven appeal, the dollar is still the highest yielding currency in the developed world and with all major central banks turning dovish, the greenback seems relatively attractive.”

This week’s talks come as the world’s two biggest economies attempt to pound a deal before a March 1 deadline, after which is U.S. tariffs on $200 billion worth of Chinese imports are scheduled to upsurge to 25 percent from 10 percent.

Financial markets have been roiled by the trade tensions over the past year, with business sentiment taking a hit around the world as the fallout of the U.S.-China discussion disrupted factory activity and damage worldwide development.

The dollar has increased on other safe havens such as the yen and franc over the week ago. It was steady versus the yen at 110.37 and a touch higher against the Swiss franc at 1.0040.

The dollar index was steady at 97.06, after advancing 0.45 percent in the preceding session, its biggest percentage increase since January 24. The index has climbed for eight straight sessions, mainly because of a falling euro, which has the biggest weighting in the index.

The single currency was off marginally at $1.1272 in early Asian trade, having lost almost half a percent. The euro has withered for six consecutive sessions, and traders anticipate more losses currently that the crucial mental support of $1.13 has been broken.

“The next level of support for EUR/USD is the November low of 1.1215 which should be tested quickly,” said Kathy Lien, managing director of currency strategy at BK Asset Management.

The European Central Bank is anticipated to keep a highly accommodative financial policy this year as development slows in the Eurozone and inflation stays low. A week ago, the European Commission sharply cut its forecasts for euro zone development for this year and following year.

Elsewhere, sterling was slightly higher at $1.2857, after sinking 0.75 percent in the preceding session. Analysts anticipate the British pound to stay volatile because of the uncertainty surrounding Brexit.

The British legislature is set to hold a dispute on Brexit on February 14 where Prime Minister Theresa May is seeking changes to her deal with Brussels after it was rejected by a record majority in parliament a month ago.

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