The Greenback trades slightly higher as the US-China trade dilemma continues
Thursday 16 May, 2019
Daily Currency UpdateUSD - United States DollarThe U.S. dollar index increases 0.14 percent, after president Trump escalated the battle with China for dominance over 5G networks by constraining Huawei's access to the US. He signed an order expected to restrict Huawei and ZTE from selling gear in the US. Intermediately after, the Department of Commerce put Huawei on a blacklist. China responded through the Communist Party's People's Daily newspaper: "America's bandit logic is what the US has said becomes what you say, and if you don't do as they say, that is going back on your word…China will never make concessions on major issues of principle, and China's core concerns must be addressed." China's state media has stepped up its rhetoric since US President Trump moved to implement billions of dollars of new tariffs on Chinese goods. Meanwhile, US Treasury Secretary Steve Mnuchin expressed caution about China, saying he has "no plans yet" to go to Beijing and that while he's "hopeful" for a deal, "I wouldn't say I'm confident." The US dollar might be impacted indirectly, because China's holdings of Treasuries fell in March for the first time in four months, dropping by $10.4 billion from February to $1.12 trillion. China remained the top holder of US sovereign debt, ahead of Japan.On the release front, housing starts climbed almost 6 percent in April, but construction still lags below last year's pace. Furthermore, results from the May Manufacturing Business Outlook Survey suggested continued growth, when the Philadelphia Fed Business Outlook came in at 16.6 this month, from 8.5 in April.
Key MoversThe GBP/USD pair dropped to a three-month low of 1.2793 this morning, and the EUR/GBP pair is headed for a winning streak, rising over 3 percent or 0.8747 as the risk of a no-deal Brexit increases. The main opposition, the Labour Party, said it wouldn’t back Prime Minister Theresa May’s latest effort to get her withdrawal agreement through Parliament. At the same time, Theresa May faces more leadership challenges from within her party. Technically speaking, 1.2775 and around 1.2750 appear to be good supports for the cable.
- USD/CAD: 1.3375 - 1.3450 ▼
- EUR/USD: 1.1176 - 1.1216 ▼
- GBP/USD: 1.2751 - 1.2866 ▼
- AUD/USD: 0.6874 - 0.6951 ▼
- NZD/USD: 0.6538 - 0.6587 ▼