Dollar falls broadly as U.S.-China trade tension escalates, China yuan tanks to an 11-year low

Market Review - 06/08/2019  00:06GMT  

Dollar falls broadly as U.S.-China trade tension escalates, China yuan tanks to an 11-year low

The greenback ended broadly lower on Monday as U.S.-China trade tension escalated which triggered selloff in the Chinese yuan and dropped to an 11-year low versus the U.S. dollar.  
  
Versus the Japanese yen, dollar met renewed selling at 106.68 in New Zealand and dropped to a fresh 7-month low at 105.80 in Asian morning on active safe-haven jpy buying due to escalating trade tension between U.S.-China trade war as well as selloff in Chinese yuan before recovering to 106.34 in Europe and then moved sideways in subdued New York session.  
  
The single currency found renewed buying at 1.1103 in New Zealand and remained on the front foot in Asia and European session then later hit a 12-day high at 1.1212 in New York afternoon due to cross-buying in euro especially versus sterling before easing.  
  
The British pound went through a roller-coaster ride. Although cable edged up to 1.2188 at Asian open, price erased its gains and fell to session lows at 1.2102 in European morning as no-deal Brexit concern lingered before recovering to 1.2174 at New York open on upbeat UK services PMI but only to retreat back down to 1.2119 and the moved narrowly.  
  
Reuters reported growth in Britain's dominant services sector unexpectedly accelerated to a nine-month high in July, according to a survey that may sooth some worries about whether Britain is slipping into recession before Brexit.   The IHS Markit/CIPS UK Services Purchasing Managers' Index (PMI), published on Monday, rose to 51.4 from 50.2 in June, above all forecasts in a Reuters poll of economists that had pointed to an unchanged reading.   
  
In other news, Reuters reported Britain will be leaving the European Union on Oct. 31 no matter what, Prime minister Boris Johnson's spokesman said on Monday, responding to reports that a government adviser had suggested parliament had missed its chance to block a no-deal Brexit.   The spokesman also said that Britain would keep reaching out to counterparts in the European Union in search of an exit deal, and that the government hoped the bloc changed its position on the so-called Irish backstop - a sticking point in negotiations.   
The Sunday Telegraph reported that Dominic Cummings, one of architects of the 2016 campaign to leave the EU, told ministers that Johnson could schedule a general election after the Oct. 31 Brexit deadline if he lost a vote of no confidence in parliament.   

On the data front, Reuters reported activity in Germany's private sector hit its weakest level in more than six years in July, a survey showed on Monday, suggesting Europe's largest economy started the third quarter on a weak footing. 
IHS Markit's final composite Purchasing Managers' Index (PMI), which tracks the manufacturing and services sectors, fell to 50.9 from 52.6 in June -- its lowest since June 2013 and closer to the 50.0 mark that separates growth from contraction.  The final figure was lower than a flash reading of 51.4 and came as an expansion in the services sector only just managed to offset weakness in manufacturing.   
  
Data to be released on Tuesday :  
  
New Zealand unemployment rate, employment change, labour cost index, UK BRC retail sales, Japan all household spending, coincident index, leading indicator, Australia trade balance, imports, exports, RBA interest rate decision, Germany industrial order, France non-farm payrolls, industrial output, and U.S. redbook, JOLTS job openings.