How The Global Currencies Faded Over Trump's Tariff Roar?

  • May 21, 2019 AEST
  • Team Kalkine
How The Global Currencies Faded Over Trump's Tariff Roar?

The United States dollar is on a bull run amid improved economic figures and the Federal Reserve optimism despite the re-escalation of the U.S-China trade war.

The Building permits and manufacturing activities in the United States improved, and unemployment claims declined, which supported the dollar prices. The market participants are also leveraging dollar against the respective cross-pairs currencies, which are continuously strengthening the dollar prices in the global market.

The U.S-China trade war also seems to have relatively less effect on the dollar prices as compared to the counter-currency yuan. The FED Chair Jerome Powell is also optimistic about the growth story of the United States, and in his recent comments Mr Powell mentioned that the inflation and the unemployment are under the decided target of the Federal Reserve.

Over such counters, the Dollar Index, which tracks the movement in dollar prices, rose substantially from the level of 97.03 (Day’s low on 13th May 2019) to the present level of 98.11 (as on 21st May 2019 AEST 7:00 PM).

Source: Thomson Reuters; DXY Daily Chart

The spiked dollar prices depreciated most of the global currencies.

On the daily chart, the Dollar Index marked a presence of a golden cross-over (Bullish Signal), encircled by a green contour on the chart, and the prices rose steeply marked by the green upside arrow on the chart. The price corrected 50% before resuming the initial up-rally which started from the level of 95.74 (Day’s low on 20th March 2019). The prices are moving toward the previous high level of 98.33 (Day’s high on 26th April 2019).

The most sought after pair of U.S. dollar and Chinese yuan marked a sharp rise, which in turn, signifies the appreciation in dollar prices and depreciation in Chinese yuan. The market participants believe that the United States holds the upper hand in the U.S-China trade war, which in turn is leading to a speculative buy in the dollar prices and strengthening the global market.

 Source: Thomson Reuters; USD-CNY Daily Chart

The prices broke the downward sloping trendline post revelling a golden cross over of 7 and 20-days exponential moving average. The prices (USD/CNY) plunged from the level of RMB 6.9783 (Day’s high on 31st October 2018) and reached the level of approx. RMB 6.6726 (Day’s Low on 21 March). The prices now retraced back by 78.6% of the original downtrend amid strength in dollar prices.

The Australian dollar also felt the pressure of skyrocketing dollar and AUD/USD fell sharply from the level of US$0.7003 (Day’s high on 13th May 2019) to the level of US$0.6863 (Day’s low on 17th May 2019).

Source: Thomson Reuters; AUD-USD Daily Chart

The strong dollar jolted the Australian currency, and the chart demonstrated a dead cross-over (bearish signal) marked by the red circle on the chart. The prices further weaken after breaking the down trendline of the symmetrical triangle and plunged substantially.

Another major global pair of USD-GBP felt the heat as well, and the Britain pound dropped concerning the dollar prices.

The prices of the pound (GBP/USD) plunged from the level of US$1.3049 (Day’s high on 10th May 2019) to the present level of US$ 1.2700 (as on 21st May 2019 AEST 8:17 PM). The daily chart revealed a dead cross-over, and the prices dropped substantially.

In a nutshell, the recent bull run in dollar prices amid improved economic figures and FED stance exerted pressure on major global pair currencies. The global currencies such as AUD, CNY, GBP dropped concerning the dollar due to the absence of domestic impetus and strengthening dollar index.


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