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Dollar stands its ground as U.S.-China tensions grow

The dollar held its own on Thursday as rising China-U.S. tension put crushing pressure on the Chinese yuan and proved a counterweight to optimism about the coronavirus recovery.

The escalating war of words between the world’s two biggest economies also spilled over to the Australian and New Zealand dollars, as a far more cautious mood holds in currency markets compared with the ebullience rallying stocks.

Hong Kong is the newest flashpoint, with U.S. Secretary of State Mike Pompeo saying on Wednesday that China’s plan to impose laws there was “only the latest in a series of actions that fundamentally undermine” the city’s autonomy and freedoms.

The Aussie and kiwi backed off two-month highs hit in the London session and were becalmed, even as the re-opening of the world’s economies kept stock markets rallying. The Aussie was last at $0.6621 and the kiwi at $0.6188.

“Overall, the macro story is hard to ignore, and things are picking up,” said Jason Wong, senior market strategist at BNZ in Wellington.

“But down under, here, obviously China is an important part of what drives markets. Markets are awaiting China’s response (on Hong Kong) and we’re caught in the middle a little bit.”

The euro rose to an eight-week peak of $1.1031 on Wednesday, climbing above its 200-day moving average, after the European Union’s executive unveiled a 750 billion euro plan to prop up the bloc’s virus-hit economies.

It pulled back as doubts over the way forward in achieving the plan emerged and last sat at $1.1021. The pound was at $1.2263.

“It is probably too early to say that the rally in the euro is the start of a major re-rating of European risk,” said Chris Turner, global head of markets at ING, in a note.

European markets head for higher open as U.S.-China dispute continues

European stocks are expected to open higher Thursday against a backdrop of rising tensions between the U.S. and China.

London’s FTSE is seen opening 73 points higher at 6,208, Germany’s DAX is seen 146 points higher at 11,800, France’s CAC 40 is seen 58 points higher at 4,737 and Italy’s FTSE MIB is expected to open up 288 points at 18,089, according to IG.

Investors will be keeping an eye on developments in an escalating war of words between the U.S. and China, with trade, the coronavirus pandemic and now Hong Kong a focus in the dispute.

U.S. Secretary of State Mike Pompeo told Congress on Wednesday that Hong Kong was no longer autonomous from China, raising questions over the special administrative region’s favorable trade relationship with the U.S. as well as opening up the possibility of sanctions on Chinese officials.

According to Trading Central (3rd party RIA) the EURUSD is long positions above 1.0870 with targets at 1.1145 & 1.1235 in extension.

Past performance is not a guarantee of future performance


Number of Lots:Required Margin:Risk Management (50%):Potential Profit/Loss 1.1145
1€ 3,333.33€ 1,666.67€ 1,179.62
5€ 16,666.67€ 33,333.33€ 5,898.10
10€ 33,333.33€ 66,666.67€ 11,796.20
25€ 83,333.33€ 166,666.67€ 29,490.50
50€ 166,666.67€ 333,333.33€ 58,981.00

According to Trading Central (3rd party RIA) the FTSE is long positions above 5880.00 with targets at 6151.00 & 6450.00 in extension.

Past performance is not a guarantee of future performance

Number of Lots:Required Margin:Risk Management (50%):Potential Profit/Loss 6450
0.5€ 12,629.54€ 6,314.77€ 10,567.12
1€ 25,259.08€ 12,629.54€ 21,134.23
5€ 126,295.39€ 63,147.69€ 105,671.15
10€ 252,590.78€ 126,295.39€ 211,342.31
20€ 505,181.56€ 252,590.78€ 422,684.62