US Dollar Strengthens as Tensions Against China Build Up

US Dollar Strengthens as Tensions Against China Build Up

Posted Monday, May 18, 2020 by
Arslan Butt • 1 min read

Early on Monday, the US dollar continues to trade strong against other major currencies over worries about rising tensions with China over the pandemic-related blamegame. At the time of writing, the US dollar index DXY is trading around 100.31.

Along with the US that has been trying to blame China for not being completely transparent about the severity of coronavirus, tensions are building up against China in Europe and Australia as well, driving a risk-off sentiment in financial markets. This sentiment is supporting the safe haven appeal of the US dollar, and weakening other riskier currencies for now.

US President Donald Trump has extended the ban on Huawei and ZTE for one more year, a move that China is expected to retaliate to, as per reports in Chinese media. In addition, Europe is also looking at ways to ban Chinese firms from investing in struggling businesses and taking over their operations.

Meanwhile, trade tensions are also on the rise between Australia and China, adding to raised tensions in global markets. The US dollar, meanwhile, is facing some pressure from worries about the Fed cutting interest rates to below zero in the near future as the US economy continues to struggle in the aftermath of the pandemic.

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