Dollar weak vs. euro; Trump news conference on China on tap
May 29, 2020 @ 19:14 +03:00
The dollar extended its slide against a surging euro on Friday, hurt by month-end flows and as the common currency continued to enjoy a boost from the European Union’s recently announced plan to prop up the bloc’s coronavirus-hit economies with a 750 billion-euro ($828 billion) recovery fund.
The dollar, a safe-haven currency, found some support as traders awaited U.S. President Donald Trump’s response to China’s tightening control over Hong Kong, which could worsen tensions between the two powers over the financial hub.
The euro was 0.32% higher at $1.1112, on pace for its fourth straight day of gains. The euro’s rally this week has pushed it over its 200-day moving average for the first time since late March and lifted it about 2% for the week, its best weekly gain in nine weeks.
Much of the euro’s move was driven by optimism generated by the European Commission’s stimulus plan announced earlier this week, as well as investors’ improved appetite for risk-taking as global economies gradually move to reopen after coronavirus-linked shutdowns, analysts said.
The euro was also helped by data that showed inflation continued to slow on crashing oil prices but underlying price growth held steady, a hopeful sign for European Central Bank policymakers trying to stave off deflation.
With Trump due to announce later on Friday his response to the Chinese parliament’s advancement this week of security legislation for Hong Kong – which many lawyers, diplomats and investors fear could erode the city’s freedoms – the dollar’s losses were limited.
The pound was about flat against the euro and the dollar ahead of a new round of Brexit talks next week.
Dollar weak vs. euro; Trump news conference on China on tap, Reuters, May 29