The Euro skyrocketed on Thursday. European Union put aside 750 billion euro to help the economies affected by the virus. The plan was approved recently, and such stimulus boosted the currency. The Euro hit an eight-week high of $1.1035, but it soon lowered to $1.1006 due to doubts about delivering the scheme.
The U.S. dollar also rose against a basket of currencies after the two-month low struck on Wednesday, which left it at 98.984. It traded at 107.81 against the yen and at $1.2248 against the British pound.
The dollar remains strong due to its safe-haven status. According to reports, the U.S. is contemplating several options to punish China over its tightening grip on Hong Kong. Sanctions, restrictions and tariffs on Chinese companies were mentioned. Investors fear that the tensions will escalate into full-blown conflict.
Mike Pompeo, U.S. Secretary of State, declared, on Wednesday, that China’s attempt to impose laws there was just the latest in a series of actions that fundamentally undermine Hong Kong’s autonomy and freedom. As a result, the greenback’s price is rising, while the Chinese Yuan declines.
The Yuan collapsed to a record low of 7.1966 per dollar in offshore trade. Meanwhile, the Australian and New Zealand dollars fell from their two-month highs hit in the London session, plunging as sentiments soured regarding Asian trade.
How much did the Aussie and Kiwi lose?
The Antipodean currencies are linked with the Chinese Yuan. When it is under pressure, the Aussie and Kiwi decline as well.
The Australian dollar tumbled down by 0.5% to $0.6592 on Thursday, while the New Zealand dollar dropped to $0.6174.
Investors are watching the events in Hong Kong closely. Jason Wong, the senior market strategist at BNZ in Wellington, stated that, while the global economy is rebounding, China is an important part of what drives markets. They are awaiting China’s response to Hong Kong, and traders feel caught in the middle of all this.