The US Dollar has been trying to get back on its feet since Monday, due to the setback that occurred in the previous trading session. The Dollar has been hoping for a comeback, but it is unlikely with the US-China trade deal that is taking a while.
What Happened After the US Dollar Declines?
With the Dollar declining, its index against six major currencies has reached 96.810 after last Friday’s percent of 0.6; the 0.6 percent has been the largest single-day percentage drop since June 2019. With the decline on Friday, the annual index gains have reduced to 0.7 percent, which makes it the smallest yearly change in the past six years.
For other currencies, there has been a development in China’s central bank, during Asian banking hours, which defined a method that would decrease borrowing costs and improve economic growth. According to a report, there has been a forecast that retail sales has increased by eight percent. On the other hand, the US Dollar is only slightly lesser than the annual gains of the Japanese yen.
The most beneficial currencies that were positively influenced by the US Dollar decline would be the currencies of Australia and New Zealand. The Australian dollar and the New Zealand Kiwi have been facing several peaks, which was promoted by the current situation and expectations that might occur with the US and China potentially signing a trade deal in the foreseeable future.
“What’s really noticeable is the narrow range of currencies during the year,” said Marshall Gittler, Cyprus-based chief strategist at Advanced Cognitive Live Signals Global (ACLS), referring to “economic and monetary policy convergence.”
“I expect less of both in 2020, for two reasons,” he stated, highlighting that the expected end of the US-China trade war would potentially result in a massive economic recovery on a global scale.
Furthermore, Gittler also believes that inflation has reduced rapidly, which causes countries to be more accommodating. “As (inflation) accelerates, countries are less likely to cut rates and maybe, possibly, conceivably some countries could start thinking about hiking rates, which would encourage monetary policy divergence.”
The Dollar Goes Down, the Euro Goes Up
With the Euro, it has managed to increase for a sixth consecutive week, to 1.1198 USD. The British Pound is also higher after the European Commission (EC) President, Ursula von der Leyen stated that the EU may have to prolong the deadline, in order to discuss a new trade relationship with Great Britain.