Just when the dollar seemed to be recovering some confidence, the US decision to proceed with an increase in 104% tariffs on China led to a rotation away from the dollar. Interestingly, the disappointment of the dollar favored European currencies yesterday, perhaps because of the opinion that the EU measured response to US tariffs makes a commercial agreement more likely, says the Analyst analyst of ING, Francesco Pesole.
The risk balance is tilted today in DXY
“One of the reasons why the dollar is suffering more for additional tariffs on China is that markets feel that the lack of immediate substitutes for some Chinese products means inflationary risks/even larger recessionaries for the US at the same time, there is a negative decreasing effect on Chinese exporters by additional tariffs.”
“While it is true that Trump is beginning to negotiate with other key partners (such as Korea yesterday), the technical times for commercial agreements are not short, especially considering the large number of parties involved at the same time. We will be attentive to whether European actions exceed the Americans again today.”
“If that happens at a time when the atlantic differential to 10 years is extended further (which has gone from 154 to 175PB in the last 24 hours), it would point out the additional loss of confidence in the assets called in USD that can add pressure on the dollar as the markets lose confidence in their value as a safe refuge. We believe that the risk balance is tilted today in DXy 102.0. “
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
