Forex Today: US-Sino tensions dented market’s mood

FXStreet Team FXStreet

What you need to know on Tuesday, May 5th:

Risk aversion led the FX board on Monday, amid mounting tensions between the US and China. US President Trump Trump said that he has strong evidence that the coronavirus originated in a Wuhan lab, although later in the that, the WHO said that it didn’t receive any evidence from the US on the matter. Trump also said that the Asian giant is not complying with the trade deal quotas, and menaced to terminate the phase one. He already threatened the country with new tariffs during the weekend.

The dollar was generally stronger although major pairs remained within familiar levels. EUR/USD eased towards the 1.0900 figure, weighed by a downwardly revised Union’s services PMI and plummeting investors’ sentiment in May.

The pound performed better than the common currency. GBP/USD bounced from 1.2404 to settle around 1.2450. The UK will start trade negotiations with the US this Tuesday.

Japan is in the middle of its golden week, and local markets will remain closed this Tuesday.

Commodity-linked currencies trimmed intraday losses and posted modest gains against the dollar, despite the weak tone of equities. Wall Street bouncing from daily lows and oil’s advance lent support.

Gold prices held on to higher ground, with spot settling just above the $1,700.00 level.

Crude oil prices advanced with WTI ending the day around $21 a barrel, reversing an early decline. Nevertheless, concerns persist as oil producers keep pumping while demand remains subdued amid the ongoing coronavirus crisis.

Bitcoin and major altcoins recover from losses; recovery is limited

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FXStreet Team

FXStreet

Composed of a group of economic journalists and FX experts, the FXStreet content team produces and oversees all content published on FXStreet. It provides a purely journalistic approach to the Forex market.

GBP/USD extends the drop to 1.3360

GBP/USD builds on Monday’s decline and briefly clinches five-day lows near 1.3360 on Tuesday. Cable’s extra pullback follows the better tone in the Greenback as uncertainty in the Middle East prompts investors to adopt a cautious stance. Meanwhile, an apathetic UK labour market report also collaborates with the selling pressure on the British Pound.

EUR/USD stays offered just above 1.1400

EUR/USD keeps the downtrend well in place for yet another day, challenging the 1.1400 contention zone on Tuesday. The continuation of the selling impulse in spot comes amid decent gains in the US Dollar, which continues to find support in the persistent effervescence surrounding the US-Iran crisis.

Middle East crisis intensifies, Gold up

Gold now seems to have embarked on a consolidative phase below the key $4,100 mark per troy ounce in the latter part of Tuesday’s session. Meanwhile, uncertainty surrounding the Middle East conflict and rising expectations for a hawkish Fed policy outlook are expected to limit the precious metal’s bullish momentum in the near term.

XRP rebounds on rising on-chain activity

Ripple (XRP) ticks up and trades around $1.13 at the time of writing on Tuesday. This rebound aligns with a broader recovery in the cryptocurrency market, attributed to reports that mediators between the United States (US) and Iran are seeking a 10-day cessation of strikes to find a way back to the signed Memorandum of Understanding (MoU).

The Iranian war has again risen

The Iranian war has again risen to the top of the economics factor list. There is no end in sight. Intelligence experts say the current level of offense/retaliation will not change minds in Tehran, while in Washington, Trump fears all-out war, which would mean boots on the ground.

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