Forex Today: Dollar in demand amid high Sino-American tensions, thin liquidity expected


Here is what you need to know on Monday, May 25:

The new week has kicked off with dollar strength as the US and China have kept tensions high. Thin liquidity and potential erratic movements may occur as the US and UK are on holiday.

Sino-American relations: China expressed anger at a US ill which it says is "directly targeting China." The US Congress is set to sanction Chinese officials over human rights abuses in Xinjiang, while tensions remain elevated around Hong Kong – protests against the new security law proposed by Beijing.

Chinese officials warn the US of a "new cold war." The world's largest economies are also clashing around coronavirus, Huawei, Taiwan, and more. However, they both pledged to respect the trade deal signed in January. The safe-haven dollar is in demand. 

Coronavirus: The number of confirmed cases has topped 5.4 million and COVID-19 has talent he lives of around 345,000, nearly 100,000 in the US. However, the pace is falling in the Western world, while South America is emerging as the current epicenter. Chinese scientists have announced progress with a treatment that neutralizes the virus.

UK: Prime Minister Boris Johnson remains under pressure after senior adviser Dominic Cummings violated the lockdown. Decisions about Brexit and the next loosening steps are awaited. Chancellor of the Exchequer Rishi Sunak is reportedly preparing to bailout strategically significant companies to avoid "disproportionate harm" to the economy. 

Negative rates: David Ramsden, a member of the Bank of England, has joined his peers in opening the door to negative rates, weighing on the pound. Andrew Bailey, Governor of the BOE, previously said the topic is "under active review." 

Europe: Austria, the Netherlands, Denmark, and Sweden – the "Frugal Four" – object the Franco-German plan to increase the EU budget by €500 billion that includes joint debt and direct grants and opt for loans and conditionality. Negotiations continue ahead of the EU Summit in mid-June. 

The German IFO Business Climate for May is set to show a bounce from the lows of 74.2 points in April.

Gold is retreating despite geopolitical tensions, yet analysts at Citi see further gains toward $2,000 amid growing demand. WTI Oil is consolidating at around $33.

Cryptocurrencies: Bitcoin is trying to stabilize after falling below the $9,000 level over the weekend.

See: Negative Rates: Only good for downing currencies?

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Feed news

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!

Latest Forex News


Latest Forex News

Editors’ Picks

AUD/USD: Bears trying to sneak in below 0.6950 but bulls give a healthy fight

AUD/USD kick-starts the week with a gap-down, seesaws around 0.6930 afterward. A surge in the virus cases, hospitalizations in the US, escalating Sino-American tension question market sentiment. 

AUD/USD News

USD/JPY tracks other risk barometers to take the bids above 107.00

USD/JPY rises to 107.64, up 0.11% on a day, as Tokyo open welcomes risk-on mood On Monday. S&P 500 Futures, Nikkei 225 and the US 10-year Treasury yields print mild gains. Coronavirus worries, global ire against China remain on the table.

USD/JPY News

Gold: Buyers can ignore soft weekly open below $1,775

Gold prices offered a downside gap near $1,774 to kick-start with the week on a back foot. Pandemic fears, geopolitical tensions keep safe-haven buyers strong amid global policymakers’ fight against economic suppression.

Gold News

WTI bulls step up to the plate despite covid-19 risks

WTI is making tracks to the upside at the start of the week, rising some .4%. Last week's closing session had US futures in WTI fell back towards $40, with the August contract closing at $40.32, while Brent Sep closed at $42.80. 

Oil News

Macro considerations in the week ahead

The risk assets had been rallying since mid-March in anticipation of an economic recovery and fueled by the massive liquidity provided by central banks and the spending plans of governments. 

Read more

Forex MAJORS

Cryptocurrencies

Signatures