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EUR/USD drops as Sino-US tensions overshadow upbeat China exports

|ByOmkar Godbole

  • EUR/USD dips as losses in US stock futures lifts greenback. 
  • President Trump orders the banning of Chinese social media apps. 
  • SIno-US tensions overshadow the surge in Chinese exports, weigh over riskier assets.
EUR/USD is feeling the pull of gravity on Friday as the oversold dollar is drawing bids on US-China tensions. 
 
The currency pair is trading at 1.1826, representing a 0.40% decline on the day, having failed to keep gains above 1.19 on Thursday. 

Focus on Sino-US tensions

The US President Trump on Thursday signed an executive order to ban any transactions with ByteDance, the Chinese company that owns the video-sharing app TikTok, starting in 45 days. "We must take aggressive action against the owners of TikTok to protect our national security," Trump said in an order. 
 
The move comes at a time when Washington and Beijing are already locked in a dispute over several issues like the origin of the coronavirus and democracy in Hong Kong. 
 
As such, the risk sentiment is weakening, despite the upbeat China data released during the Asian trading hours. The futures tied to the S&P 500 are currently down 0.5% and the greenback is gaining ground against majors. The dollar index, which tracks the value of the greenback against majors, is trading at 93.14 at press time, representing a 0.4% gain on the day. 
 
China’s dollar-denominated exports rose 7.2% in July, while imports fell 1.4% from a year ago, data from the country’s General Administration of Customs showed on Friday. The uptick in exports could be taken as a sign of improvement in global demand conditions. 
 
Looking ahead, the pair may continue to take cues from the broader market sentiment apart from the German Industrial Production, due at 06:00 GMT, and the US July Nonfarm Payrolls figure, due at 12:30 GMT. 

Technical levels

 

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