The US dollar gained today, emerging as the second strongest currency on the Forex market (losing only to the extremely strong yen), amid escalating trade tensions between the United States and China.
Fears of trade wars intensified after US President Donald Trump proposed to more than double the proposed tariffs from 10% to 25% on $200 billion worth of Chinese goods. The US dollar, which often serves as a safe haven in times of fears and uncertainty, profited from the rising worries. The Japanese yen, which is also considered to be a safe currency, performed even better, becoming the strongest currency during the Thursday’s session.
The Federal Reserve made a policy announcement yesterday, but it turned out to be largely non-event. While some analysts pointed out few differences in the wording of the statement, for the most part the Fed just repeated what it was saying earlier. As a result, markets continued to price in two more interest rate hikes this year.
EUR/USD dropped from 1.1659 to 1.1599 as of 17:22 GMT today. GBP/USD declined from 1.3126 to 1.3023. USD/JPY was down from 111.72 to 111.31 before bouncing to 111.65 later.
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