Despite doubts that the influence of the president’s comments will be long, tactically they came out at an opportune moment, not allowing the growing index of the dollar to gain momentum after touching highs for the last year. At least for the short-term, the scales turned to dollar bears and sent DXY (Dollar Index) from the recent highs.
In addition to the direct reaction of the currency market, it is worth noting the flattened yield curve for of U.S. Treasuries. This is good news for the markets, mostly for the EM, that slightly decreases the degree of uncertainty around trade wars.
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Despite the weakening of the dollar in the second half of last week, the upcoming ECB press conference on Thursday has a chance to exacerbate the competition of bulls and bears on the currency markets.
After ECB head’s comments on the previous meeting, the Euro collapsed by 2.5% and the EURUSD pair dropped to the area of 12-month lows. However, it is more likely that this time, the balanced-comments-scenario of Draghi in the range from neutral to positive for the currency after a portion of criticism from the American president about the active pressure on their currencies in Europe and China.
The weakening of the dollar also helped gold, oil, and Chinese exchanges to grope some support last week. On Friday, the oil also gained some help from reports about a reduction in drilling activity. As a result, Brent trades above $73 a barrel at the time of writing against last week’s lows at 71.30.
This article was written by FxPro