The Euro and Sterling declined against the U.S. dollar

The euro lowered by 0.3% at $1.1845 on Friday, tumbling down from its recent highs. The British pound slid by 0.2% to $1.3115 as well. The Japanese yen traded flat at 105.58. However, other major currencies weakened against the U.S. dollar.

The Australian dollar plummeted down by 0.3% at 0.7220. The Reserve Bank of Australia’s downbeat assessment of the local economy caused its decline. And the Aussie deteriorated further due to the concerns about worsening U.S.-Chinese relations.

On Thursday, President Donald Trump issued an executive order to ban transactions with two Chinese companies – ByteDance and Tencent Holdings Ltd. ByteDance owns the video-sharing app TikTok, while Tencent Holdings is the owner of the WeChat messaging app.

Trump’s announcement caused some turbulence in the forex markets. Despite that, the U.S. dollar surged forward on Friday, while other currencies slid lower.

The United States’ employment data was much more upbeat than analysts expected. Such results caused the greenback to rebound.

The dollar still faces some obstacles. So far, U.S. Republicans and Democrats have failed to agree on the cost of fiscal stimulus measures. Meanwhile, traders say that this stimulus is necessary for the economy to gain more momentum and recover faster.

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What do experts think?

According to Commerzbank’s currency analyst Esther Maria Reichelt, what matters now for currencies is the economic outlook. And the key still is, which countries are emerging after the coronavirus pandemic as winners.

Traders expected non-farm payrolls data to show that U.S. jobs creation slowed in July from the previous month. That would indicate that a surge in Covid-19 infections is undermining the economic recovery there.

The dollar weakened over the recent weeks due to a combination of rising U.S. coronavirus infections and a lack of consensus in Washington over additional fiscal stimulus. However, the greenback is recovering from a persistent sell-off in recent weeks. Its fast rebound proved that any shift in traders’ risk sentiment could easily bring back appetite for the dollar.