The US dollar returned to rise against major currencies on Monday again, ending a wave of decline that continued for seven consecutive sessions, according to the dollar index. This comes after increasing fears of seeing a new trade war between the United States and China amidst accusations regarding the emerging Coronavirus.
The dollar index, which measures the performance of the federal currency against a basket of six major currencies, rose today to record its highest level at 99.52, after opening trading today at 99.27. On Friday, the dollar index hit a 4-week low at 98.76.
US President Donald Trump and Secretary of State Mike Pompeo blamed China for the spread and outbreak of the Corona pandemic in the United States and around the world, and the latest attack from Pompeo came on Sunday when he said that there was "a large amount of evidence" that the virus appeared in the laboratories of Wuhan.
Consequently, concerns have grown over several news that pointed to more tariffs and supply chain disruptions at a time when global growth prospects are already fragile. Accordingly, investors’ appetite for risk in the financial markets diminished causing a drop in stocks and rise in safe haven assets.
The biggest mover in the currency market was the Chinese yuan, which fell to its lowest level in six weeks at 7.1555 per dollar in offshore market. It is worth noting that the escalation of trade tensions between the United States and China has the potential to end the relative stability of the US dollar against the Chinese yuan.
Later in the day, the
US economy will release data on the factory orders for March, where the index
may slump 9.2 percent after a stagnation in February.