U.S. Dollar Higher Amid Mounting Trade Worries
May 17 2019 - 6:00AM
RTTF2
The U.S. dollar gained ground against its most major
counterparts in the European session on Friday, as U.S.-China trade
tensions heated up, with Beijing intensifying its rhetoric over
trade with Washington.
President Donald Trump has sought to blame China for backing out
of a nearly completed trade deal, although a spokesperson for
China's Ministry of Commerce claims the U.S. is responsible for
serious setbacks in the trade talks.
Commerce Ministry spokesperson Gao Feng accused the Trump
administration of "bullying behavior" with a recent increase in
tariffs, according to state-run Chinese news agency Xinhua.
"It is regrettable that the U.S. side unilaterally escalated
trade disputes, which resulted in severe negotiating setbacks," Gao
said.
He added, "We urge the U.S. side to correct wrongdoings as soon
as possible to avoid causing heavier damages to businesses and
consumers in both countries and dragging down the global
economy."
Investors await the University of Michigan's preliminary report
on consumer sentiment for May, due at 10:00 am ET. The consumer
sentiment index is expected to inch up to 97.5 in May from 97.2 in
April.
The Conference Board is also due to release its report on
leading economic indicators in the month of April. Economists
expect the leading economic index to rise by 0.3 percent. The
currency held steady against its key rivals in the Asian session,
barring the yen.
The greenback spiked up to 1.0113 against the franc, setting a
4-day high. The greenback is seen finding resistance around the
1.03 level.
The greenback moved up to a 2-week high of 1.1158 against the
euro from yesterday's closing value of 1.1173. If the greenback
rises further, it is likely to challenge resistance around the 1.10
level. Data from the Eurostat showed that Eurozone's core
inflation, which excludes prices of energy, food, alcohol and
tobacco, accelerated in April at a faster than estimated pace to
its highest level in two years.
Core inflation climbed to 1.3 percent in April, which was higher
than the initial estimate of 1.2 percent. In March, the figure was
0.8 percent.
The greenback appreciated to 1.2736 against the pound, its
biggest since January 15. This follows a low of 1.2798 hit at 5:30
pm ET. On the upside, 1.26 is likely seen as its next resistance
level.
The greenback strengthened to a 4-1/2-month high of 0.6873
against the aussie, 9-day high of 0.6525 against the kiwi and a new
3-week high of 1.3514 against the loonie, off its early lows of
0.6897, 0.6547 and 1.3457, respectively. The next possible
resistance for the greenback is seen around 0.66 against the
aussie, 0.64 against the kiwi and 1.37 against the loonie.
By contrast, following a weekly high of 110.03 hit at 9:00 pm
ET, the greenback pulled back to 109.49 against the yen. Next key
support for the greenback is seen around the 108.00 region.
Bank of Japan Governor Haruhiko Kuroda said that Japan's
extremely low interest rates are likely to remain at the current
levels for an extended period given the uncertainties surrounding
economic activity and prices.
Kuroda said the Bank would "maintain the current extremely low
levels of short- and long-term interest rates for an extended
period of time, at least through around spring 2020, taking into
account uncertainties regarding economic activity and prices
including developments in overseas economies and the effects of the
scheduled consumption tax hike."
The U.S. leading indicators for April and University of
Michigan's preliminary consumer sentiment index for May are
scheduled for release in the New York session.
At 1:40 pm ET, Federal Reserve Governor Richard Clarida will
deliver a speech about the Federal Reserve's policy strategy,
tools, and communication practices at an event hosted by Federal
Reserve Bank of Philadelphia.
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