The U.S. dollar held on to its gains on Tuesday after hitting a one-week high against the Euro. A stalemate in the U.S. Congress over fiscal stimulus and the U.S.-China tensions supported safe-haven currencies.
On Monday, Trump administration officials and Congressional leaders stated that they were ready to resume negotiations on a coronavirus aid deal. However, it’s still unclear whether they can bridge their differences.
Meanwhile, China retaliated to Washington’s sanctions on Hong Kong and Chinese officials. It also imposed sanctions on 11 U.S. citizens, among whom are Republican lawmakers.
Companies from China and other countries that do not comply with accounting standards would be delisted from American stock exchanges as of the end of 2021, stated U.S. Treasury Secretary Steven Mnuchin.
Thus far, the forex market’s response to the U.S.-China conflict has been limited. However, analysts noted that the confrontations have longer-term implications.
How did the Euro trade?
Euro/dollar pair was neutral at $1.1736 on Tuesday after tumbling down to $1.1722 earlier. Before that, the greenback had fallen for seven straight weeks. According to traders, it was long due for a short-term corrective bounce.
Commerzbank currency analyst Antje Praefcke noted that the market is still expecting that everything will turn out for the best in the dispute, referring new U.S. stimulus packet. She added that an agreement has probably already been priced accordingly.
In this case, the U.S. dollar wouldn’t have any significant upside potential. The analyst thinks that the Euro does not have much to offer these days, either. The common currency has been rallying recently as traders believe that the continent is outperforming the United States.
Meanwhile, the Turkish lira remained near Friday’s record low of 7.3650 due to the concerns about the country’s dwindling foreign-exchange reserves. The lira traded at 7.2785 per dollar on Tuesday.
On the other hand, the Norwegian crown surged forward as oil prices increased. The Canadian dollar and the Russian rouble soared as well. The crown climbed up by 0.3%, while the Canadian dollar held at $1.33 at last.
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