FX Daily Update – US and China Tensions Spook Markets
- Tensions between the US and China take a turn for the worst
- Weakness in the dollar index has kept G10 FX upbeat, but for how long ?
US vs China
Tensions between the US and China heightened over the weekend after the arrest of a Chinese researcher who American authorities said had been hiding in San Francisco. It is believed the individual had been conducted illegal surveillance on US companies and providing this information to the Chinese government, fuelling controversies over China’s illegal surveillance practices.
The Dollar Index broke through 16-month lows this morning, trading below the 118 level, amid the heightened tensions between US and China. JPY strengthened as a safe heaven which saw USD/JPY moving 0.5% lower overnight, reaching 105.46.
Broad USD weakness drove G10 FX pairs throughout the Asian trading session with GBPUSD breaking above 1.2800 (+0.75%) and EURUSD extending gains above 1.1700
What Markets will be focusing on this week
Optimism from the EU recovery agreement and anticipation around the US stimulus package are likely to remain the key drivers for FX markets this week
- Mon – US durable goods orders (Consensus: 7%)
- Tues – US consumer confidence index