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2020.05.2510:18:00UTC+00Dollar Appreciates As U.S.-China Tensions Mount

The U.S. dollar strengthened against its most major rivals in the European session on Monday, as U.S.-China tensions intensified after Beijing blamed the US of pushing relations towards a "new cold war".

Over the weekend, Chinese foreign minister Wang Yi said that Washington's political attacks on China over the coronavirus and global trade issues "are taking China-US relations hostage and pushing our two countries to the brink of a new cold war".

Traders remained cautious following weekend protests over Beijing's move to impose a new security law on Hong Kong.

The U.S. Commerce Department on Friday added as many as 33 Chinese companies and other institutions to a blacklist for human rights violations and to address U.S. national security concerns involving weapons of mass destruction and other military activities.

White House economic adviser Kevin Hassett said that Beijing's move would end the territory's status as the financial hub of Asia.

Trading volumes remained light with holidays in the U.S., U.K. and Singapore.

The greenback rose to 1.2164 against the pound, from a low of 1.2192 set at 8:30 pm ET. If the greenback rises further, 1.19 is seen as its next resistance level.

The greenback approached 1.0870 against the euro, setting a weekly high. The greenback is seen locating resistance around the 1.05 level.

Data from Destatis showed that German economy contracted at the fastest pace since the global financial crisis, as initially estimated, due to the coronavirus pandemic.

Gross domestic product fell 2.2 percent sequentially, the biggest fall since the first quarter of 2009 and the second biggest since the German unification.

The greenback spiked up to a 1-week high of 0.9736 against the franc, from last week's closing value of 0.9709. The greenback may target resistance around the 1.00 level.

In contrast, the greenback held steady against the yen, after rising to a 4-day high of 107.78 in the previous session. The pair had finished Friday's deals at 107.60.

Final data from the Cabinet Office showed that the Japan leading index declined less than expected in March, but the reading was the lowest since mid-2009.

The leading index, which measures the future economic activity, fell to 84.7 in March from 91.9 in the previous month. The preliminary score was 83.8. The final reading was the lowest since June 2009.

The greenback pulled back to 0.6103 against the kiwi and 0.6543 against the aussie, from its early highs of 0.6084 and 0.6520, respectively. The next likely support for the greenback is seen around 0.64 against the kiwi and 0.70 against the aussie.

The greenback dropped to 1.3975 against the loonie, compared to Friday's closing value of 1.4004. On the downside, 1.35 is possibly seen as the next support level for the greenback.



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