The euro gained 0.2% at $1.0977 on Friday. The European Central Bank announced that it would make loans to banks even cheaper. This news caused the euro’s rally on Thursday. However, the currency steadied against the U.S. dollar on the following day.
The majority of Europe and Asia were closed on Friday due to the International Workers’ Day. Some investors hope that a new month brings good news. However, they are still concerned as coronavirus infections increased to 3.3 million globally, claiming more than 230,000 lives.
The U.S. dollar fell against the Japanese yen, trading down 0.3% at 106.88 yen. Meanwhile, the sterling traded down by 0.4% against the euro at 87.34 pence. It lowered by 0.2% against the dollar at $1.2566 as well.
The Australian dollar also dropped down by more than 1% to 0.6438, reaching its weakest point since Tuesday. On the other hand, the Canadian dollar tumbled by 0.5% to 1.4016 against the greenback.
The Chinese Yuan fell. What caused its decline?
The Chinese yuan dropped by 0.7% to 7.1350 versus the greenback in the offshore market on Friday, reaching its lowest point since April 2nd.
U.S. President, Donald Trump announced on Thursday that he believed the virus might have originated in a virology lab in Wuhan, the Chinese city where the outbreak began. Trump’s accusation to China about mishandling the outbreak of the novel coronavirus caused the yuan’s downfall.
However, other U.S. officials have also downplayed their likelihood. And the Chinese state-backed Wuhan Institute of Virology has also dismissed the allegations. Still, Trump threatened new tariffs on Beijing.
There is a high risk of geopolitical tensions escalating considerably as lockdowns reverse, given the scale of the coronavirus’ impact – noted Derek Halpenny, the Head of Research at MUFG. He thinks that would be another hit to global trade, adding a layer of support to the dollar going forward.