21.05.202013:33 Forex Analysis & Reviews: Dollar overtakes major currencies

According to this morning's data, it became clear that the dollar was able to recover some of the losses that were recorded at the very beginning of the trading week. This was made possible due to the fact that most market participants are in limbo and are very restrained against the backdrop of increasing tensions between the two largest economic powers – China and the United States. Weak economic data, as well as reduced trade between countries, are forcing investors to weigh all risks more carefully.

The tension was felt and slowed down the Australian dollar immediately, which is extremely sensitive to such incidents. This morning, a decline of 0.62% was recorded, which sent it to the level of 0.6554 US dollars. Thus, it took a step back from the maximum ten-week value that it was able to reach this Tuesday.

The New Zealand dollar also declined, its fall amounted to 0.52%, and the current level - 0.6114 US dollars.

The Australian dollar led the mood of today. Most experts say that the negative dynamics of S&P futures seriously puts pressure on it, which, in turn, demonstrates a general large-scale trend.

The parallel can be traced quite clearly. Futures for stocks in the United States of America declined by almost the same percentage as the national currency of Australia. Perhaps, this can not be a coincidence.

Investors also saw a situation with growing tensions between China and America. The diplomatic relations of these countries have noticeably worsened recently, which market participants could not help but pay attention to.

However, this is not the only conflict situation in the world. Tension is also rising between China and Australia. And the reason remains the same: the Australian authorities are increasingly urging an international investigation into the origin and spread of COVID-19.

It can be recalled that there was another surge of negativity after the speech of the President of America yesterday, who continued to accuse China of silent information and the spread of coronavirus around the world again.

The Chinese authorities did not support this attack. he controversy. However, the yuan exchange rate this morning became slightly more expensive than the expected level, which may indicate the government's intention to support the national currency before the annual parliamentary session, which could initiate the ratification of new stimulus measures to restore the economy.

To date, the US dollar has risen against the yuan by 0.2%. The Chinese currency is trading at 7.1049.

In general, in relation to the currency basket, the dollar began to cost 0.25% more and reached the level of 99.426.

Further dynamics of the currency will determine the level of business activity in Europe as a whole, the UK, in particular, and the United States. So, analysts already say that the Central Bank of the UK is likely to decide to switch to negative rates, since weak inflation does not provide other options.

The national currency of England is also under pressure from the US dollar, which has become more expensive to the pound by 0.4%. The pound was in the region of 1.2188 dollars, which is very close to the minimum values over the past two weeks.

In addition, the Japanese yen began to feel pressure. So, the Ministry of Finance of the country made a statement this morning that export last month has catastrophically declined, which amounted to around 21.9% in annual terms. Thus, it turns out that Japan's exports have been declining for 17 consecutive months, due to a reduction in global demand and the impact of the COVID-19 pandemic.

The yen fell 0.07% against the euro and took the level of 117.99 yen per euro. It can be noted that the last trading session closed with a reading of 118.07 yen. Today, the dollar was higher than the yen by 0.16%, which sent it to the level of 107.7 yen per dollar.

The single European currency also declined against the dollar. The euro began to cost 0.23% lower, which drove it to around 1.0955 euros per dollar. Yesterday, its level was 1.0980 euros per dollar.

In turn, the ICE Dollar index increased (6 currencies), an increase of 0.29% compared to the previous trading session. The WSJ Dollar indicator (16 currencies) jumped 0.26%.

So far, there is a reason that the rise of the dollar in the currency market will continue further on the background of incoming economic news.