The U.S. dollar traded at 93.039 on August 17, 2020, a dip from where it ended last week. The slight decline in the value of the dollar against several currencies is significant in the light of economic slowdown in the U.S. and rising U.S. bond yields.
The value of foreign currencies against the dollar showed a little bit of change with Australian dollar touching a three-session high of $0.7194, New Zealand dollar standing at $0.6534, yen staying at 106.54, yuan trading at 6.9364 per dollar, and won and rupiah edging lower.
There are several other factors that might affect the dollar value including delay in the U.S-China trade deal review, Federal Reserve minutes, and the U.S. election.
Contrary to expectations, scheduling conflicts delayed the U.S.-China trade deal review, earlier scheduled for August 15, 2020. As per National Australia Bank’s senior strategist Rodrigo Catril, it is something that should be avoided for some time.
Catril expressed concerns over how the U.S. presidential election and emerging COVID-19 hot spots in Europe could affect the euro value and suggests seeking immediate solutions to these.
Amid growing tensions over trade relations between the U.S. and China, American. President Donald Trump intends to pressurize Chinese firms such as Alibaba Group Holding Ltd..
A recent outbreak of COVID-19 has forced New Zealand to postpone its general election by a month.
While looking at the U.S. politics, the nation is all set for the Democratic national convention starting on August 17 that will end with a speech from presidential candidate Joe Biden on August 20.
Though uncertainties are looming around the U.S. economic recovery, markets are optimistic about the Federal Reserve minutes on August 20, hoping a change to the central bank’s guidance will be made at the meeting in September 2020.
According to Chris Weston, head of research at brokerage firm Pepperstone, investors believe that the Federal Reserves’ efforts to contain inflation and rebound yields on U.S. Treasuries might help the U.S. dollar to flourish and gold reserves to gain.
The COVID-19 pandemic did not spare the Asian economy; as the world’s third-largest economy Japan witnessed a record economic contraction in the Q2 2020. However, euro and sterling remain unaffected in Asia, while trading at $1.1844 and sterling at $1.3095, respectively.