Summary:
The US dollar has shown strength on Friday, rising against other major currencies as investors await the outcome of ongoing trade negotiations between the US and China. The pound sterling continues to fall amid Brexit-related uncertainties, with Prime Minister Theresa May stating that talks have stalled due to the EU’s rejection of the UK’s proposals without offering an alternative. This development raises concerns about a potential no-deal Brexit, pushing the value of the British currency downwards.
Global Currency Market Trends on Friday
The US dollar index rose by 0.40% to 93.84 as of 11:46 AM ET (15:46 GMT), reflecting the greenback’s strengthening position against a basket of six major currencies. This upward trend can be attributed in part to investors’ cautious stance following China’s announcement earlier in the week that it will impose new tariffs on US goods worth $60 billion, effective September 24th.
This move by China comes as a response to the 10% tariffs imposed by the United States on $200 billion in Chinese goods, which are set to increase to 25% at the end of this year. The imposition of these tariffs has raised concerns about potential trade disruptions and their impact on global economic performance.
Dollar Gains Against Safe-Haven Yen
Despite Japan’s inflation data showing an unexpected seven-month high, the dollar maintained its upward momentum, rising against the safe-haven yen with a 0.11% increase to 112.60. This contrasts with expectations that the yen should see an appreciation value given Japan’s relatively high inflation rate.
Sterling Falls Amid Brexit Fears
The British pound continues to struggle amidst the ongoing Brexit saga. Prime Minister Theresa May’s recent statement indicates that talks between the UK and EU are at a stalemate, raising fresh concerns about the reality of a no-deal Brexit scenario.
According to May, EU countries must approve any agreement prior to March 29th, an exit date set by the UK, while also requiring parliamentary approval in the UK. This situation has led to significant market anxiety, with sterling experiencing a notable decline as investors fear the potential economic repercussions of a disorderly withdrawal.
GBP/USD fell by 1.43% to 1.3071 as of Friday afternoon, making it one of the day’s largest losers among currency pairs. This fall puts pressure on the pound and underscores fears about the future direction of British monetary policy in a no-deal scenario.
Euro Zone Manufacturing PMI Adds Pressure
Meanwhile, the euro has taken a hit due to lower-than-expected manufacturing PMI data from the eurozone, dipping by 0.29% to 1.1742 against the dollar. This downward trend reflects uncertainty and unease among investors about future economic trends within the region.
Shifts in Australian and New Zealand Dollar Markets
The Australian dollar also saw decline on Friday, with an AUD/USD value down by 0.16% at 0.7280. On a contrasting note, NZD/USD experienced growth due to Moody’s reaffirmation of the country’s AAA credit rating.
This led to a notable rise in the New Zealand dollar, seeing it surge upward by as much as 1.04% to reach 0.6679 against the US dollar. The positive market reaction underscores the confidence investors have placed in New Zealand’s economic policies and future outlook.
