Dollar almost 1-Month High as Forint Firmed in All-Time Low
August 30, 2019 | Friday
On Friday, the dollar increased to its highest level in almost a month in early trading. The continued support from tentative signs of friendship in the trade war along with China ahead of the long Labor Day weekend.
The dollar made some of its strongest gains against the safe-haven Swiss franc. Also, it lost ground against the euro this week. And this was due to the continued suggestions that the Swiss National Bank is quietly intervening to counteract the effect of safe-haven income into the franc from investors spooked by the trade.
The US Dollar Index, which tracks the dollar against a basket of developed market currencies was at 98.528, up around 0.1% from late Thursday and just off a four-week high of 98.55 at 4 AM ET (0800 GMT). Contrary to the euro, it was up 0.2% at $1.1037.
Incoming European Central Bank President Christine Legarde commented on Thursday that there will be little immediate change in policy direction when she takes over from Mario Draghi in November. Thus, the euro is struggling. Deutsche Bank strategist Jim Reid said that Legarde sounded marginally more concerned about the side-effects of negative interest rates for banking profitability than Draghi after Legarde said that the ECB hadn't yet reached the lower bound for interest rates - a consensus view in Frankfurt.
In the absence of anything substantial to back up the trade optimism that ran through markets on Thursday, the Chinese yuan maintained around the 7.14 level. ING's chief economist for Asia, Robert Carnell said in a blog post that he doesn't think China is about to comply without the US removing a lot of existing tariffs and holding off from new shoes. He also said that the US needs a big concession from China on IP and openness or it, too, will appear weak.
As the noise over Boris Johnson's suspension of parliament refused to die down, sterling weakened further against both dollar and euro although without generating any concrete new initiatives.
Moreover, in emerging markets, after hitting a new all-time low on Thursday, the Hungarian forint recovered, as the country's central bank left open the possibility of a first interest rate cut since 2016. The euro was at 331.30 forint, by 4 AM, down from high as 331.52 on Thursday.
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