- Tensions with China and the fiscal stalemate back home helps the US dollar.
- German ZEW due today
- Oil exporters’ currencies bullish as price rises
The US dollar is trading near a one-week high against the euro as fiscal stimulus impasse persisted along with heightened tensions between the US and China.
Both Democrats and Republicans publicly displayed a readiness to resume negotiations, but the differences will not be easily sidestepped.
China has imposed sanctions against 11 US citizens including Republican lawmakers, in retaliation to the earlier action by the US government against its officials.
The US Treasury Secretary Steven Mnuchin had earlier warned that foreign companies failing to adhere to the accounting standards would be delisted from the US stock exchanges by the end of 2021.
The risk-on mood of the markets was not much affected by the recent flareups between the most significant two economies. Still, analysts are counting long-term implications from the tensions.
EUR/USD hasn’t changed much and is at 1.1736 dollars after falling to 1.1722 dollars earlier – the weakest level since August 4. Before that, the dollar has seen continuous fall for seven weeks and was in oversold territory, ripe for a corrective bounce.
A Sino-US agreement has been already priced in, and there is only limited upside for the dollar. The euro also is lacking catalyst for an up move, suggesting the EUR/USD pair to trade in a range of 1.19-1.16 dollars.
The German economic Zew survey is due today. Euro has been viewed favourably after the continent performed better in economic yardsticks and in handling the pandemic, compared to the US.
In another region, the Turkish lira is trading near Friday’s record low as the country witnessed a steep fall in foreign exchange reserves. More concrete actions to arrest the fall are expected from the country’s central bank. The currency was at 7.2785 a dollar near Friday’s low of 7.3650 Liras for a dollar.
The rise in oil prices helped the Norwegian Crown, the Canadian dollar and the Russian rouble to post gains in recent days. The best performer in the group, the Crown, jumped by 0.3 Percent, to touch 9 to the dollar- helped by its central bank stance on Monday putting it among the least dovish G10 central banks. The Canadian dollar was at 1.33 dollars.
