Dollar reaches Two-week high after China reports Slower Growth
The dollar reached its ace in the last two week as the week started. It was much comforting for fear of weakening global growth after China reported slower growth in 2018.
At the onset of 2019, the expectation of a weakened dollar was unanimously expected by the currency traders owing to the possibility of the U.S. central bank stop raising interest rates and the economy would slow after a fiscal boost last year.
But Dollar has experienced its first weekly gain since mid-December, buoyed by hopes of a thaw in U.S.-China trade tensions and stronger-than-expected U.S. industrial production numbers.
The dollar index was steady at 96.388 on the first day of the week. The index is a measure to determine Dollar’s strength against a group of six major currencies. It had risen to 96.394 on the last Friday, is the highest since January 4.
Esther Maria Reichelt, an FX strategist at Commerzbank in Frankfurt, said the U.S. Dollar is benefiting from its role as a safe currency haven.
She also added that the Federal Reserve could help the weaker economy with monetary policy measures protecting the United States significantly from weakening global growth and making the dollar the currency of choice.
The Chinese figures showing a slower growth of GDP in the last quarter implies the pressure created by the U.S.-China trade friction. Markets appeared to take the outcome, mainly in line with expectations, in their pace.
The Euro nudged up 0.2 percent to $1.1376 but hovered around the two-week low point of $1.1353 brushed on Friday.
Stephen Gallo, BMO’S European currency strategy head said Euro is cornered on the downside. Their strong bias is to use levels of more than $1.1400 as selling opportunities to aim for a test below the $1.1300 mark over the coming days.
But, this week will keep the investors busy in keeping track on Thursday’s European Central Bank meeting to see if policymakers will react to worsening global economic prospects, yet experts suggested it might be too early for a change in policy direction.
The British Pound stayed steady at $1.2873.
The Pound will be impacted as British Prime Minister Theresa May will put forward a motion on her proposed next steps regarding Brexit. And over this week lawmakers will be considering options of alternatives forwarded by the PM.
The Australian dollar was steady at $0.7155 after a fall of 0.3 percent last week.
The Australian Currency was mostly unaffected by China’s growth numbers though analysts agree that any sharp drop in demand from its biggest trading partner would put a dent in local assets.