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Dollar Gains as Pound Slumps to 11-Month Lows

2018-8-7 10:10:26Basics of Trading
Dollar Gains as Pound Slumps to 11-Month Lows

The dollar edged higher against its rivals Monday amid investor worries about an escalating U.S.-China trade tensions and a slump in the pound to an 11-month low.

The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, rose by 0.14% to 95.16.

Chinese state media hit back at President Trump, accusing him of orchestrating "street fighter-style deceitful drama," forcing countries to cede their interests to those of the United States.

The scathing attack on Trump comes just days after China said it would impose duties of 25%, 20%, 10% and 5% on U.S. products worth more than $60 billion if the Trump administration followed through on threats to impose harsher tariffs on $200 billion of Chinese goods.

In series of tweets over the weekend, Trump claimed the tariffs are working "big time" and that imported goods should be taxed or made in the United States.

Some have suggested the growing concerns over an all-out trade war between the United States and China was supporting demand for the greenback as traders bet the U.S. economy, given its current strength, would fare better in a trade war.

Safe-haven demand amid rising U.S.-China trade tensions, however, were limited as the yen and Swiss franc lost ground against the greenback.

USD/JPY rose 0.13% to Y111.43, while USD/CHF rose 0.22% to 0.9966.

Elsewhere a plunge in the pound and a subdued euro helped the dollar hold gains.

GBP/USD fell 0.45% to $1.2944 as comments by officials about a no-deal Brexit raised fears Britain would leave the European Union without securing a trade agreement.

EUR/USD fell 0.05% to $1.1562 on weaker-than-expected factory orders data.

USD/CAD rose 0.09% to C$1.3003 as rising oil prices supported the loonie, limiting gains in the pair.

The rise in oil prices emerged as investors renewed bets on steep losses of Iranian crude from the market after Washington confirmed Monday the financials sanctions on Iran would go into effect Tuesday at 12:01 a.m. ET (04:00 GMT).