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Dollar Starts Week on a Down Note, But Losses Capped by U.S.-China Meeting Delay

imageForex9 hours ago (Aug 16, 2020 10:12PM ET)

(C) Reuters.

By Gina Lee – The dollar was down on Monday morning, but capped its losses after a meeting between U.S. and Chinese officials, originally scheduled for Saturday, was delayed.

Scheduling conflicts reportedly led to the postponement of an online meeting to discuss trade, as well as other issues.

Some investors welcomed the news, with the delay leaving the phase one trade deal between the two countries intact for now.

“That’s good news in the sense that it’s something we can place on the back burner for now,” National Australia Bank (OTC:NABZY) senior foreign exchange strategist Rodrigo Catril told Reuters.

“But there are other uncertainties coming up that need to be resolved,” he warned, with U.S. President Donald Trump indicating a potential increase of U.S. pressure on Chinese tech firms, such as Alibaba (NYSE:BABA) Group, on Saturday.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies was down 0.07% to 93.023 by 10:04 PM ET (3:04GMT).

Investors are also keeping an eye on the U.S. presidential elections, now less than three months away as the four-day Democratic national convention due to being later in the day.

The U.S. Federal Reserve is due to release its minutes on Thursday, with investors on the lookout for any clues to policy changes ahead of the Fed’s September meeting.

Investors are expecting more tolerance in the Fed’s approach to inflation, Chris Weston, head of research at Pepperstone, told Reuters.

“The bond market is key here and if the Fed can drive down real yields then the dollar will follow, and gold will rally – and vice versa,” he added.

The USD/JPY pair dropped 0.06% to 106.53. Japan reported a record economic contraction in the second quarter earlier in the day, with gross domestic product shrinking 27.8% year-on-year.

Meanwhile, the number of COVID-19 cases continues a relentless march upwards. There are almost 21.6 million cases globally as of August 17, according to Johns Hopkins University data.

Europe reported fresh COVID-19 outbreaks over the weekend, with Italy and Spain ordering nightclubs shut and France warning of an uptick of cases. The fresh outbreaks are also challenging the Euro, which has been on an upward trend since the European Union struck a deal for a EUR750 billion ($888.036 billion) COVID-19 stimulus package in July.

The AUD/USD pair gained 0.27% to 0.7190. The NZD/USD pair inched up 0.02% to 0.6539, with New Zealand Prime Minister Jacinda Ardern delaying the general election to October 17. The country’s battle with its first outbreak in 102 days led to the four-week delay from the original date of September 19.

The USD/CNY pair fell 0.10% gain of 6.9432, while the GBP/USD pair was up 0.12% to 1.3100.

Dollar Starts Week on a Down Note, But Losses Capped by U.S.-China Meeting Delay

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