US Dollar Stabilizes Amid Worries About Global Trade War
The US dollar has stabilized versus major currencies, as concerns over global trade tensions and recent turmoil in emerging markets supported safe haven demand for the dollar. The dollar index was at 95.04 level, after falling 0.33% yesterday. The American currency dropped yesterday, pressured by growth of the British pound, which was boosted by reports that both the UK and German governments have abandoned key Brexit demands.
Britain and Germany decided to abandon some of their demands, which were put forward in the negotiation process, in order to facilitate the achievement of consensus. The sides agreed not to focus on the details of their future relationships yet, and instead focus on the immediate prospects, in particular in the transition period, which must be organized.
Meanwhile, the pound was almost unchanged today, with the GBP/USD pair trading at 1.2900 level, after rising 0.45% on Wednesday. The euro fell against the US dollar, with the EUR/USD pair dipping by 0.13% to 1.1616 level.
The dollar retreated from the two-week highs, but it is expected, that it will be sustained in the long term, as a result of weak currencies in emerging markets (EM). Emerging markets have been hard hit by concerns that US policy tightening will pressure countries that have borrowed heavily in dollars in recent years and fears that their export dependent economies could be hit by trade disputes.