The past trading week was marked by risk aversion caused by prospects for trade wars between the United States and its trading partners. While it weighed on the US dollar, the greenback’s performance was not that bad considering the circumstances as the US currency ended the week the third strongest among majors.
The surprise announcement of tariffs on steel and aluminum imports by the USA prompted strong criticism and threats of retaliation from China and the European Union. Earlier during the week, the dollar got boost from hawkish testimony by the new Federal Reserve Chairman Jerome Powell, though his second testimony on Thursday was less welcomed by markets.
The Japanese yen was the strongest among most-traded currencies thanks to risk aversion. What was perhaps even more important, Bank of Japan Governor Haruhiko Kuroda changed his tone to more hawkish one, talking about possible exit strategy from monetary stimulus.
The euro was also surprisingly firm, perhaps because traders were anticipating discussion of monetary stimulus reduction at the European Central Bank meeting next week.
The Great Britain pound was weak, the second weakest among majors, as the EU showed tough stance regarding the Brexit deal.
The Canadian dollar was the weakest due to the ongoing NAFTA negotiations and the planned US tariffs, which can hurt Canada’s economy especially badly as the nation is the biggest exporter of steel to the USA.
EUR/USD ended the week at 1.2319 after opening at 1.2292 and sliding to the weekly low of 1.2160. USD/JPY declined 1.3% from 107.15 to 105.71. GBP/USD dropped from 1.3987 to 1.3798. USD/CAD rallied as much as 1.9% from 1.2638 to 1.2882.
If you have any questions, comments or opinions regarding the US Dollar,
feel free to post them using the commentary form below.