Tuesday, 18 August 2020
The euro continues to strengthen against the dollar on Tuesday and approaches the two-year high of 1.25 reached in February 2018.
The dollar is weakened by a US economy plunged in a recession, as well as the latest postponement of US trade negotiations with China.
By 11:10 am Brussels time, the euro had gained 0.33% against the greenback, at $1.1915.
The “dollar index”, which measures the performance of the dollar against a portfolio of currencies, has meanwhile hit its lowest in two years.
The dollar is losing ground “because of the concern over the postponement of discussions on the trade agreement between the United States and China, initially scheduled to take place last Saturday,” Avtar Sandu, analyst at Phillip Futures commented.
The two economic powerhouses were to take stock of the trade agreement signed in January and no date has yet been given for a new meeting.
In addition, Washington extended more sanctions against Chinese telecoms giant Huawei on Monday, further reinforcing tensions between the two countries.
The Empire State Manufacturing Index which rates the relative level of general business conditions New York state has also come out with sluggish results for the 6th straight month, which has also prompted traders to shed their greenbacks, according to several analysts.
“This shows that the economic recovery in the United States is slowing down and that the slow pace of budget negotiations seems to be weighing on the outlook for small and medium-sized enterprises,” Ipek Ozkardeskaya, analyst at Swissquote Bank said.
Meanwhile investors have turned to gold which rose above the 2,000 dollar mark on Tuesday, helped by its status as a safe haven and by the weekend demand for the dollar.
The Brussels Times