The Greenback has appreciated modestly overnight to its highest level since July 19, the index (DXY) rose from 95.23 up to 95.52 on the back of on-going tensions between the United States and China. China has lashed out and said it would impose duties of 25%, 20%, 10% and 5% on U.S products worth more than $60bn, that is if Trump was to follow through with further threats on Chinese imported goods.
The greenback had a strong start to the week with EUR/USD dropping below 1.1550 for the first time since late June. The dollar benefitted from ongoing concerns re-trade tensions throughout the day however after a sell-off through the Asian session, equity markets pared their losses, and most bourses are trading in the green this morning. The big geopolitical event yesterday was the re-introduction of US sanctions against Iran which came into effect overnight. The penalties include the Iranian government’s purchase of US bank notes and dollar related transactions as well as targeting the investments of precious metals and commercial planes amongst other measures to target Iranian industry. Further sanctions targeting Iran’s oil sector are due to come into effect in November. We are likely to see a deterioration of relations akin to the tit for tat insults that US President, Donald Trump and North Korean Leader, Kim Jong-un traded throughout last year. However, Trump has stated he would be willing to meet with the Iranian leader, Hassan Rounhani for face to face discussions. Many will be hoping a Trump/Kim Singapore-style summit will resolve matters at some point in the future however this seems lightyears off at present.