Exchange Rate: Dollar Reaches 4-Month High Against Yuan
May 9, 2019 | Thursday
Exchange Rate -- The forex markets at the risk-off tone as early trading within Europe shown that yen rising while the renminbi falls. That mostly led by the recent tariff threats by the United States on Chinese import goods.
The current updates regarding the U.S.-China trade talks on Wednesday shocked the markets. As the markets confused on the happenings on the trade talks between the world's largest economies, it still expects a deal to happen. Positivity within the market was also led by China's Vice Premier Lui He's travel to Washington later today, to attend a trade talk this week.
During a rally at Florida on Wednesday, President Donald Trump said that China "broke the deal." Critics interpret that China walked back its commitments to be stricter in enforcing mechanism on whatever both countries had agreed on.
The Ministry of Commerce of the People's Republic of China then responded and warned that heightening the trade dispute is not "in the interest of the people" for both countries and also globally.
The Chinese yuan then drops to its lowest since January facing the dollar falling to 6.8141. Aussie also drops hitting its four-month low.
The ING analysts Carlo Cacuzzo and Chris Turner said that the movement in USD/CNY came as a surprise. It pushes the markets out of the comfort zone. They added that it is expected for the yuan to other major currencies, including the Canadian dollar, South African rand, Korean won, and Indonesian rupiah.
During 03:00 AM ET (07:00 GMT) the dollar index was at 97.330. It was down by 0.1 percent during late Wednesday. Mainly because of the large declines facing the safe-haven Swiss franc and yen.
Moreover, the British pound still holding in upon a threat to United Kingdom Prime Minister Theresa May blows over. However, hopes for a cross-party deal which may deliver smooth exit from EU still low.
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