The Chinese yuan changed lower at 7.0732 per dollar in the offshore market on Friday. The Australian dollar was also steady at $0.6917 as analysts expect new data to show a swift rebound in retail sales in May. The New Zealand dollar traded at $0.6509.
The U.S. continues to reprimand China for implementing Beijing’s new national security law for Hong Kong. On Thursday, the U.S. Senate unanimously approved legislation to penalize banks doing business with Chinese officials. Investors fear further friction between the world’s two largest economies.
Investors were waiting for data on China’s services sector. They may avoid taking big positions for a while.
Meanwhile, the greenback traded into a narrow range as the market slowed due to the holiday. Safe-haven flows supported the dollar as a resurgence of coronavirus in the United States discouraged some traders from taking on excessive risk.
The U.S. currency was steady at 0.9469 Swiss francs on Friday after three straight days of gains. It traded at $1.2395 against the euro in Asia. The British Pound traded hands at $1.2471. Against the Japanese Yen, the greenback changed insignificantly at 107.50 yen.
Does sentiment favor buying the dollar?
The FX market was subdued as another rise in coronavirus infections threatens to put the breaks of economic activity. Several U.S. states already postponed plans to reopen businesses. Additionally, the authorities were taking steps to curtail activity during the extended Independence Day holiday weekend. Thursday’s data showed that the U.S. economy added more jobs than expected in June. That news hasn’t helped sentiment, though.
New infection cases in the United States have been on an uptrend since June – stated Junichi Ishikawa, the senior foreign-exchange strategist at IG Securities. The market is now leaning toward buying the dollar, particularly against emerging market currencies, as the greenback is considered the safest asset. Analysts noted that sentiment favors more gains in the dollar as investors turn cautious.
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