The euro remained mostly steady at $1.1386 on Friday. However, it edged up against the British pound at 90.62 pence. The euro increased due to the hopes that European officials would agree on fiscal stimulus measures at a new meeting. On the other hand, the Sterling changed insignificantly at $1.2569.
Meanwhile, the U.S. dollar traded at 107.22 yen, after gaining 0.3% in the previous session. The dollar also changed hands at 0.9451 Swiss francs, close to the highest since July 3.
The Chinese yuan tumbled down to 7.0006 against the greenback. It’s the lowest the Chinese yuan fell in three weeks as diplomatic frictions steadily increase between the United States and China.
The United States has increased the pressure on China during the week in a wide-ranging dispute over civil liberties, territorial claims, and access to technology. Some analysts say it’s like a new Cold War.
What caused the Dollar’s surge?
Investors were worried that a rise in the coronavirus cases is starting to curb economic activity. As a result, the U.S. dollar held onto gains against most currencies on Friday. Negative sentiment drew more safe-haven flows into the U.S. currency.
Some traders noted that deteriorating U.S.-China ties is a reason to avoid riskier trades. Others announced that they are beginning to see troubling signs in recent data that a recent surge in coronavirus infections is threatening the U.S. economy. Such sentiment should keep the dollar in demand for the time being.
The greenback looks like an excellent safe haven now because of concerns about a return to coronavirus lockdowns – stated Minori Uchida, the head of global market research at MUFG Bank. Despite that, the dollar may start to lose this status if long-term treasury yields continue to fall.
Over the last week, the U.S. currency was on course for gains against the Japanese yen, the Swiss franc and sterling due to safe-haven inflows.