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Forex News: U.S. Dollar Weakens On Renewed Concerns Over U.S.-China

U.S. Dollar Weakens On Renewed Concerns Over U.S.-China Trade War

05/30/2018 - 09:46:00 (RTTNews)

(RTTNews) - The U.S. dollar was lower against its most major counterparts in the European session on Wednesday, weighed by renewed fears of a trade war between Beijing and Washington, as the U.S. President Donald Trump had threatened to impose punitive tariffs on Chinese imports.

Concerns over U.S.-China trade war resurfaced, after the White House announced Tuesday that it will impose a 25 percent tariff on $50 billion of Chinese goods containing "industrially significant technology."

"The United States will implement specific investment restrictions and enhanced export controls for Chinese persons and entities related to the acquisition of industrially significant technology, the White House said in a statement.

The announcement came just few days ahead of a visit by Commerce Secretary Ross to Beijing for further trade negotiations.

Data from payroll processor ADP showed that private sector employment increased slightly less than expected in the month of May.

ADP said private sector employment climbed by 178,000 jobs in May after rising by a downwardly revised 163,000 jobs in April.

Economists had expected employment to increase by 190,000 jobs compared to the jump of 204,000 jobs originally reported for the previous month.

Later in the day, the Federal Reserve is due to release its Beige Book, a compilation of anecdotal evidence on economic conditions in the twelve Fed districts.

The greenback showed mixed trading against its major counterparts in the Asian session. While it fell against the euro and the pound, it held steady against the yen. Against the franc, it rose.

The greenback fell to a 2-day low of 1.1647 against the euro, after rising to 1.1519 at 10:30 pm ET. If the greenback continues its fall, 1.19 is possibly seen as its next support level.

Survey results from European Commission showed that Eurozone economic sentiment weakened to a 9-month low in May.

The economic confidence index dropped to 112.5 in May from 112.7 in April. This was the lowest reading since August 2017 but above the expected score of 112.0.

Reversing from an early high of 1.3242 against the pound, the greenback edged down to 1.3307. Next key support for the greenback is likely seen around the 1.35 level.

Data from the British Retail Consortium showed that UK shop prices continued to fall in May.

The BRC-Nielsen shop price index declined 1.1 percent year-on-year in May, the biggest fall since January 2017.

The greenback dropped to 0.9881 against the Swiss franc, from a high of 0.9935 hit at 1:45 am ET. The next possible support for the greenback is seen around the 0.97 level.

Survey results from the KOF Swiss Economic Institute showed that a measure signaling future turning points in the Swiss economy declined back to its long-term average in May.

The KOF leading indicator dropped to 100 in May from 103.3 in April, which was revised down from 105.3. Economists had expected the index fall to 104.7.

The greenback fell to a 5-day low of 1.2950 against the loonie, 2-day low of 0.7557 against the aussie and near a 3-week low of 0.6982 against the kiwi, after having advanced to a high of 1.3040, 2-week high of 0.7476 and near a 2-week high of 0.6883, respectively in early deals. The next likely support for the greenback is seen around 1.26 against the loonie, 0.77 against the aussie and 0.72 against the kiwi.

On the flip side, the greenback held steady against the yen, after peaking at 108.98 at 7:45 am ET. At yesterday's close, the pair was worth 108.75.

Survey data from Cabinet Office showed that Japan's consumer confidence improved marginally in May.

The seasonally adjusted consumer confidence index rose to 43.8 in May from 43.6 in April. The index was forecast to rise to 43.9.

Looking ahead, at 10:00 am ET, the Bank of Canada announces its decision on interest rates. The BoC is widely expected to keep borrowing costs unchanged at 1.25 percent.

The Swiss National Bank Chairman Thomas Jordan will give a speech titled "Innovation and Entrepreneurship: Success Factors in a Changing Economic World" at the De Vigier Foundation Awards Ceremony, in Switzerland at 10:45 am ET.

The Federal Reserve's Beige book report will be out at 2:00 pm ET.

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