Why the dollar continues to grow that threatens the euro and the Australian dollar

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The dollar starts the week near a six-week high against a basket of major currencies, investors continue to rely on the security of dollar assets against the backdrop of new concerns about trade tensions between the US and China. Negotiations between these countries will be the main topic of this week. The strengthening of the dollar confirms the cautious mood in the market at present. But the Australian dollar and euro are now at a vulnerable level, and a further decline in risk sentiment may lead to a decrease in these currencies. The dollar even added 0.1 percent against the yen, to 109.82 yen, nevertheless, the movement in this pair is likely to be small on Monday, as the Japanese markets are closed on a public holiday.

The United States will put pressure on China in connection with long-standing demands to change its attitude to the intellectual property of American companies, only in this case it will be possible to conclude a trade deal that will stop the increase in tariffs for Chinese imports. US President Donald Trump said he does not plan to meet with Chinese President Xi Jinping before March 1.

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The strengthening of the dollar is likely to continue, despite the Fed taking a cautious stance. At the moment, investors are choosing the safety of the dollar due to fears of a sharp slowdown in the global economy, and this is moving it up. The euro was under pressure, as European debt yields fell to their lowest level in two years. The single currency lost 2.5 percent this month. The European Commission sharply lowered its forecasts for economic growth in the eurozone this year and next, as the largest economies of the block are expected to be constrained by tensions in world trade and domestic problems.

The material has been provided by InstaForex Company – www.instaforex.com