NEW YORK (Reuters) – The dollar rose on Monday, building on two consecutive weeks of gains, as investors bet that trade war rhetoric and a strong U.S. economy would continue to boost the greenback.
China proposed retaliatory tariffs on $60 billion worth of U.S. goods ranging from liquefied natural gas (LNG) to some aircraft on Friday, as a senior Chinese diplomat cast doubt on prospects of talks with Washington to solve their bitter trade conflict.
Some analysts see trade tensions as beneficial for the U.S. dollar as the economy is better placed to handle protectionism than emerging markets, and as tariffs may narrow the U.S. trade deficit.
“Trade tensions are very much dollar positive so I suspect that’s contributing to the dollar gains today,” said Erik Nelson, a currency strategist at Wells Fargo in New York.
Against a broad basket of currencies .DXY, the dollar was last up 0.24 percent to 95.369 and is within striking distance of more-than-one-year peak of 95.652 reached on July 19.
The dollar’s gains have been more pronounced against emerging-market currencies as investors bet that an escalation in trade war concerns would hit these export-oriented economies harder.
Chinese stocks .SSEC slumped nearly 2 percent on Monday.
Since mid-April, the dollar index .DXY has gained 6 percent while an emerging-market local currency bond exchange traded fund (LEMB.K) has fallen more than 10 percent over the same period.
The greenback was also boosted on Monday by disappointing German data and concerns about the U.K.’s plan to leave the eurozone.
The euro EUR=EBS fell to a five-week low of $1.1527 as German industrial orders fell more than expected in June, posting their steepest monthly drop in nearly a year and a half.
The single currency was last down 0.1 percent at $1.1555.
Britain’s pound sank to an 11-month low as comments by officials about a no-deal Brexit stoked fears Britain would crash out of the European Union without securing a trade agreement.
The main U.S. economic focus this week will be Friday’s consumer price inflation report for July, which is expected to show a 0.2 percent increase in core inflation in the month, according to a Reuters poll.
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Currency bid prices at 10:17AM (1417 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR= $1.1553 $1.1567 -0.12% +0.00% +1.1573 +1.1530
Dollar/Yen JPY= 111.4100 111.2500 +0.14% +0.00% +111.5200 +111.1600
Euro/Yen EURJPY= 128.75 128.70 +0.04% +0.00% +128.7800 +128.5100
Dollar/Swiss CHF= 0.9972 0.9941 +0.31% +0.00% +0.9984 +0.9940
Sterling/Dollar GBP= 1.2939 1.3005 -0.51% +0.00% +1.3017 +1.2920
Dollar/Canadian CAD= 1.3011 1.2988 +0.18% +0.00% +1.3039 +1.2988
Australian/Doll AUD= 0.7381 0.7399 -0.24% +0.00% +0.7405 +0.7375
ar
Euro/Swiss EURCHF= 1.1522 1.1500 +0.19% +0.00% +1.1525 +1.1499
Euro/Sterling EURGBP= 0.8927 0.8895 +0.36% +0.00% +0.8932 +0.8891
NZ Dollar/Dolar NZD= 0.6730 0.6741 -0.16% +0.00% +0.6755 +0.6725
Dollar/Norway NOK= 8.2431 8.2536 -0.13% +0.00% +8.2670 +8.2436
Euro/Norway EURNOK= 9.5248 9.5490 -0.25% +0.00% +9.5536 +9.5269
Dollar/Sweden SEK= 8.9255 8.9133 +0.05% +0.00% +8.9397 +8.9095
Euro/Sweden EURSEK= 10.3135 10.3086 +0.05% +0.00% +10.3209 +10.2980
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