The dollar climbed up against most Asian currencies on Monday. The demand for safe-haven currencies continues due to an argument between the U.S. and China over civil liberties in Hong Kong. The greenback traded at $1.0895 against the Euro in Asia, close to its strongest point in a week. It was also close to a one-week high versus the Swiss Franc at 0.9719. Against the Japanese Yen, the greenback was steady at 107.65 Yen.
The Sterling changed insignificantly, currently at $1.2185. It traded at 89.44 pence against the Euro. Several members of British Prime Minister Boris Johnson’s party called for the resignation of his aide Dominic Cummings for breaking travel restrictions during the pandemic lockdown. However, Johnson has backed his senior adviser on Sunday. Still, this news caused pressure on the Sterling.
What about Asian Currencies?
The Chinese Yuan fell along with Australian and New Zealand Dollars as risk-aversion hit foreign exchange markets. The Yuan lowered to 7.1372 per dollar in onshore trade, nearing the seven-month low hit on Friday.
The Australian dollar lost early gains, to end up trading at $0.6537 on Monday. Risk aversion offset optimism about lifting pandemic lockdowns. Children returned to full-time face-to-face learning in New South Wales on Monday, allowing many parents to return to offices. Australian states began executing a three-stage plan to remove most of the social restrictions imposed in July. Meanwhile, the New Zealand dollar also dropped to $0.6096.
A senior White House official noted that Beijing’s plan to impose a security law on the former British colony of Hong Kong. That could lead to U.S. sanctions. However, such a course could worsen an already tense relationship between the world’s two largest economies.
Takuya Kanda, general manager of research at Gaitame.com Research Institute in Tokyo, also stated that the tension between the U.S. and China is the biggest concern presently. Things were already bad, and will probably get worse because of the Hong Kong security law. Kanda also highlighted that this supports risk-off trades, which is good for the Dollar and the Yen.
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