Dollar Drifts Lower in Tight Trading Ranges By Investing.com

  


© Reuters.

By Peter Nurse

Investing.com – The dollar edged lower in early European trade Friday, but trading ranges have been tight as traders attempt to weigh up the conflicting forces of a continued economic recovery with heightened tensions over China’s move to tighten control over Hong Kong.

At 2:55 AM ET (0655 GMT), the , which tracks the greenback against a basket of six other currencies, stood at 98.293, down 0.1%, while fell 0.4% to 107.18 and rose 0.2% at 1.2344.

German retail sales fell at their fastest pace since 2007 in April, data showed on Friday, but the drop – at 5.3% on the month – was not as steep as expected in a sign of the relative resilience of Europe’s largest economy during the coronavirus crisis. March’s figures were also revised to reflect a gentler decline.

While in the U.S., Thursday’s initial jobless claims data showed that more than two million Americans filed for unemployment benefits for the first time last week. This is another horrendous figure, but the weekly totals have continued to fall since hitting a peak of 6.8 million in late March.

“At the moment, hopes for economic recovery are strong, but I expect this to gradually fade to increased concern about the U.S.-China relationship,” said Minori Uchida, head of global market research at MUFG Bank in Tokyo.

“When that happens, there will be more risk-off trades, which supports buying of both the dollar and the yen.”

At the moment the foreign exchange markets are holding their breath ahead of U.S. President Donald Trump’s statement in response to China parliament’s passing of an anti-sedition law relating to Hong Kong.

“The question is how far Trump will go at today’s press conference, as removing Hong Kong’s favored status would probably spark negative market developments, hitting global risk sentiment,” said analysts at Danske Bank, in a research note to clients.

At 2:55 AM ET, traded at 7.1515, not far off the record of 7.1966 reached on Thursday.

The euro has continued to strengthen Friday, driven by increased confidence in the global economy but also by EU institutions starting to agree that an accommodative stance is indeed needed, especially in terms of fiscal policy. 

“We see the latest European Commission proposals for an increase in the EU Budget and a recovery fund of €750bn as a potential game changer,” said analysts at Barclays (LON:), in a research note.

At 02:55 AM ET, traded at $1.1098, up 0.2%, having earlier broken through the $1.11 level for the first time since late March.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Read More…