Forex News: Dollar Extends Gains As Trade Tensions Ease

Dollar Extends Gains As Trade Tensions Ease

(RTTNews) - It was another positive week for the greenback as easing trade tensions and hopes of a deal with China helped the U.S. Dollar build on gains made in the previous week. The week ended May 9 witnessed the U.S. Dollar inter alia gaining against the euro, the Australian Dollar, the Japanese yen, the Canadian Dollar, the Swedish Krona and the Swiss franc but slipping against the British pound. The Dollar Index closed more than a quarter percent higher in a week's time.

The Dollar Index (DXY), a measure of the Dollar's strength against a basket of 6 currencies added 0.31 percent during the week ended May 9. The DXY which had closed at 100.03 on May 2 finished trading at 100.34 a week later. During the week, the index climbed from the low of 99.17 recorded on Tuesday to the high of 100.86 recorded on Friday as markets priced in the likelihood of a trade deal between the U.S. and China.

Data released by the Institute for Supply Management on Monday had showed the ISM Services PMI unexpectedly jumping to 51.6 in April from a nine-month low of 50.8 in March. Markets had anticipated a level of 50.6.

The Fed on Wednesday held rates steady as widely expected but flagged concerns about the tariff policies raising inflation and slowing economic growth.

Amidst the dollar's strength driven by tariff deal expectations, the Euro slipped 0.42 percent against the Dollar. During the week ended May 9, the EUR/USD pair dropped to 1.1248, from 1.1296 a week earlier. The pair ranged between $1.1382 recorded on Tuesday and $1.1196 on Friday.

The week ended May 9 witnessed the pound rising 0.26 percent against the dollar despite a widely expected rate cut by the Bank of England. The sterling, which had closed at $1.3272 on May 2 rallied to $1.3306 by May 9. The GBP/USD pair traded between a high of 1.3404 touched on Tuesday and a low of 1.3211 recorded on Friday.

The Aussie also plunged against the U.S. Dollar during the week ended May 9. The AUD/USD pair traded between a high of 0.6516 touched on Wednesday and a low of 0.6371 recorded on Friday. The slippage for the pair during the week was 0.50 percent, from 0.6444 on May 2 to 0.6412 on May 9.

The Japanese yen slipped during the week ended May 9 as a potential easing in global trade tensions diminished the yen' safe haven appeal, lifting the USD/JPY pair. The USD/JPY pair which had closed at 144.95 on May 2, increased to 145.36 in a week's time. The pair ranged between 142.35 and 146.19 during the week.

Amidst the euphoria of the U.S.-China trade deal, the Dollar Index has jumped to 101.56. The EUR/USD pair has plunged to 1.1111 whereas the GBP/USD pair has slipped to 1.3197. The AUD/USD pair has fallen to 0.6384. The yen's weakness has lifted the USD/JPY pair to 148.22.

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