The U.S. dollar was stable on Monday. This is despite concerns about global tensions with China overshadowing improving sentiment from easing restrictions. The currency firmed slightly against the Japanese yen, at 107.25 yen per Dollar, as Japan fell into recession. Against the majority of other Asian currencies, the greenback remained steady at 100.380 after hefty gains last week.
On the other hand, the British pound collapsed to an almost two-month low. This was due to speculation about negative interest rates. The sterling declined by 0.1% to $1.2091, after a week of deadlock with the EU over a post-Brexit trade deal. Meanwhile, the Bank of England’s chief economist discussed negative interest rates in a Saturday interview.
The pound tumbled down to a seven-week low at 89.45 pence per euro and a four-month low at 53.14 pence per Aussie.
How did the Australian Dollar fare?
Australia has also suffered due to trade issues. The leader of the EU’s largest political alliance is demanding a temporary ban on Chinese takeovers of struggling companies. It is negatively impacting the Aussie, as it’s dependent on trade with China.
The Australian Dollar steadied slightly due to the Australian Financial Review newspaper’s report about conciliatory remarks from China’s foreign ministry. However, it remained below 65 cents, at $0.6425.
Kim Mundy, Commonwealth Bank of Australia FX analyst, stated that traders are worried, as they see the tensions between the U.S. and China ratcheting higher. Investors supported the U.S. dollar because of that.
U.S. retail sales plummeted down by 21.6% on a year-on-year basis last month, while 20 million Americans lost their jobs. On Sunday, the Federal Reserve Chairman, Jerome Powell, stated that even under the best of circumstances it would be a long road to recovery.
According to Powell, people will have to be fully confident for the economy to rebound fully. And they may have to await the arrival of a vaccine as well.