US Dollar Lingers Above 93 Level, Gold Fail to Extend Bullish Moves
The US dollar index stayed above 93 levels as economic and market data has been supporting the reserve currency against the basket of major currencies. The resumption of trade talks and improving consumer price index and manufacturing data helped in enhancing trader’s sentiments on a reserve currency.
On top, the sharp drop in daily coronavirus infections is adding to bullish sentiments. The USD index is currently trading above 93 levels after hitting twenty-seven months low of around 92 last week.
On Tuesday, top-level trade officials from the US and China spoke with each other to review the program on the phase 1 trade deal. Both countries agreed on a phase 1 trade deal early this year.
“Both sides see progress and are committed to taking the steps necessary to ensure the success of the agreement,” the Office of the United States Trade Representative said in a statement.
China agreed to increase up to $200 billion American goods purchases in 2020 and 2021 compared to pre-trade war levels in 2017, according to the phase 1 trade deal. However, the world’s second-largest economy is far behind the targeted levels. China blames coronavirus spread for lower than expected purchases.
The US economic data also supported the trader’s confidence in the US dollar. The US business activity ramped up sharply in August and hit the highest level since early 2019, according to the IHS Markit data.
Moreover, services and manufacturing indices surged to the highest level this year. US home sales deal hit a new record level in the past two months, which is another optimistic sign for economic recovery.
Gold prices, on the other hand, have been facing barriers in sustaining the gains that it had generated in the past two months. Gold is currently trading around $1900 an ounce. Euro dropped from two years high against the US dollar, but the common currency still trades around 1.18 level.