The Euro traded at $1.1736 on Tuesday after plummeting down to $1.1722 earlier. On the other hand, the U.S. dollar soared. Before that, the greenback had been falling for seven straight weeks. Traders think that it was long due for a short-term corrective bounce.
Meanwhile, the Turkish lira traded at 7.2785 per dollar on Tuesday. It remained near Friday’s record low of 7.3650. The lira dropped due to concerns for the country’s dwindling foreign-exchange reserves.
The Norwegian crown rallied as oil prices increased. The Canadian dollar and the Russian ruble surged forward as well. The crown added 0.3%, while the Canadian dollar traded at $1.33 at last.
What are analysts’ estimations about the U.S. dollar?
Thus far, the greenback managed to hold on to its gains after skyrocketing to a one-week high against the Euro. Trades bought safe-haven currencies as the stalemate continued in the U.S. Congress over fiscal stimulus, and as U.S.-China tensions continue to rise.
Trump administration officials and Congressional leaders announced on Monday that they were ready to resume negotiations on a Covid-19 aid deal. But it’s still unclear whether they can overcome their differences and reach a consensus.
According to Antje Praefcke, Commerzbank currency analyst, traders hope that everything will turn out for the best in the dispute. But she thinks that an agreement has probably already been priced accordingly, in which case, the U.S. dollar wouldn’t have any significant upside potential.
Praefcke added that the Euro does not have much to offer these days, either. Investors believed that the continent was outperforming the United States. This caused the common currency to rally recently.
Uncertainty about the stimulus worries traders. And escalating U.S.-China tensions don’t help matters. China retaliated to Washington’s sanctions on Hong Kong and Chinese officials recently. It imposed sanctions on 11 U.S. citizens, Republican being lawmakers among them.
U.S. Treasury Secretary Steven Mnuchin also referred to the subject on Tuesday. He stated that companies from China and other countries must comply with accounting standards. If not, they will be delisted from American stock exchanges as of the end of 2021.
The forex market’s response to the U.S.-China conflict has been limited so far. But experts think that the confrontations have longer-term implications.