Dollar eases, as European tensions deescalate
July 4, 2018The Dollar eased marginally against its counterparts on Tuesday, as the Euro steadied after partners in Germany’s coalition settled a row over migration that had threatened to topple Chancellor Angela Merkel’s government.
The Dollar dropped, as trade tensions escalated. However, the greenback gained traction and rose against commodity currencies, such as the Australian dollar, and emerging market currencies whose economies are most vulnerable to a downturn in trade.
The Dollar index which measures the performance against a basket of six major currencies was down by 0.10 percent to 94.955 after gaining about 0.45 percent the previous day.
The Euro had slipped on Monday after German Interior Minister Horst Seehofer offered to resign, but tensions later eased when his Christian Social Union party reached to a deal with Merkel’s Christian Democrats over illegal immigration, and the resignation threat was later withdrawn. The Euro shed 0.27 percent or 0.55 cents overnight to trade at 1.16148 EURUSD at 11:00 GMT.
Ongoing concerns towards the Euro have been lurking for the time being. But the underlying immigration and refugee theme could continue to remain a potential risk factor.
Over in the United Kingdom, Economic data last week showed the economy’s slowdown in early 2018 was less severe than first anticipated, but business and consumer surveys have shown a mixed picture of the second quarter.
The Sterling fell toward an eight-month low against the dollar on Monday after stronger-than-expected manufacturing sector data failed to temper investors’ concerns about a Brexit cabinet meeting later in the week.
Bank of England officials weighing up the next rise in interest rates have been keen to emphasize the more positive numbers.
Regarding the safe havens, the Dollar was higher by 0.17 percent at 111.075 USDJPY at 11:00 GMT, after edging up by 0.2 percent from the previous day, supported by robust U.S. economic data, higher Treasury yields and a bounce in shares on Wall Street.
The Commodity-linked Currencies, Australian, New Zealand and Canadian dollar, advanced against their US counterpart, supported by a rise in oil and copper prices.
The Canadian Dollar was relatively stable against its U.S. counterpart; The USDCAD edged up by 0.03 percent to trade at 1.3182 at 11:00 GMT.
New Zealand and Canadian Dollars both advanced, the AUDUSD rose 0.22 percent against the Greenback to trade at 0.7371 at 11:00 GMT. Meanwhile, the Kiwi remained flat to trade at 0.6714 NZDUSD at 11:00 GMT.
Additionally, the Reserve Bank of Australia holds its monthly policy meeting on Tuesday and is most likely going to keep rates at 1.5 percent, where they have been since mid-2016.
