Dollar Slides, Euro Recovers

Aug 07, 2018

The U.S. dollar was lower on Tuesday as the Chinese yuan steadied.

The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, decreased 0.25% to 94.95 as of 11:13 AM ET (15:13 GMT).

Trade uncertainty has boosted the greenback in the last few months, as the U.S. economy is seen as stronger, but the dollar has failed to break above the 95.5 level.

On Friday, China warned it would impose tariffs on up to $60 billion of U.S. goods in response to White House plans to propose tariffs of 25% instead of 10% on $200 billion of imported Chinese goods. The Chinese offshore yuan recovered slightly, but was still near a 15-month low due to trade war fears, with USD/CNH down 0.55% to 6.8280.

The dollar was lower against the safe-haven yen, with USD/JPY decreasing 0.19% to 111.20. In times of uncertainty, investors tend to invest in the Japanese yen, which is considered a safe asset during periods of risk aversion.

The euro was higher after the dollar fell, with EUR/USD rising 0.35% to 1.1595.

Sterling was also higher, with GBP/USD rising 0.07% to 1.2952, despite worry over the possibility of a no-deal Brexit.

The Turkish lira slumped as it neared its record low on Monday amid a diplomatic spat with the U.S. USD/TRY fell 1.49% to 5.2518.

The Australian dollar recovered with AUD/USD up 0.51% to 0.7425, while NZD/USD was up 0.09% to 0.6738. The loonie was lower against the greenback, with USD/CAD up 0.08% to 1.3014.