US Dollar On The Defensive Over Weak Economic Data and Impeachment Push

US Dollar On The Defensive Over Weak Economic Data and Impeachment Push - One USD coins
Bill Cascade   NEW 26/09/2019 00:00:00 Forex

US dollar lost some ground against a basket of other major currencies as traders reacted to weaker than expected consumer confidence data. The greenback outlook also dampened following remarks by President Donald Trump at the United Tensions that once again aroused concerns as to whether the U.S. and China will reach a trade agreement.

Greenback Weakens 

The dollar has already dropped to the 97.9 level this week after a pullback to 98.1 handle. Weighing on the greenback strength is the confirmation that consumer confidence in the U.S. fell the most in almost nine months in September, to 125.1 from 134.2 last month.

Consumer confidence plunging is a big blow as the U.S. economy has remained resilient in part because of increased spending. A further decline could elicit talk of rate cuts as a way of cautioning the U.S. economy

A confirmation that the Democrats in the U.S. are planning to impeach the president is another emerging tailwind that continues to pile pressure on the greenback after remaining resilient in recent months.

The U.S. House of Representatives is opening a probe as to whether the president sought help from Ukraine as part of an effort to smear democrat front-runner for the 2020 election Joe Biden. While it is highly unlikely that the impeachment drive will lead to Tramp removal from office, the uncertainty that votes with the process is what is weighing in on the dollar.

Political in fights in Washington could affect Trump ability to reach an agreement with China. Such a position could leave the world economy in a fragile position amidst growing concerns of a brewing recession.

“If an impeachment inquiry looks like ending his re-election chances in 2020, he may throw caution to the wind and harden his attitude to a China trade deal, increasing the chances of a global recession next year," said Jeffrey Halley, Senior Market Analyst, Asia Pacific, OANDA.

U.S. Political Uncertainty

The impeachment drive comes at a time when the U.S. is entangled in a fierce standoff with China over trade imbalance, something that continues to trigger fear in the financial market. Trump maintained that he would not accept a bad deal with China at the U.N. and continues to fuel concerns whether the long-running standoff will ever end.

Weakness in the dollar resulted in the strengthening of the Japanese Yen, given its growing appeal as a safe-haven in times of crisis. The USD/JPY consequently fell 0.1% on the weakness of the dollar back to the 107.44 level.

The USD/CAD, on the other hand, remained flat at the 1.3251 level.

The Swiss Franc just like the Japanese Yen, continues to edge higher, given its safe-haven status. The Franc is currently trading at highs of 0.9862 against the dollar and remains one of the best-performing currencies.

The British Pound rally continued in the wake of the Supreme Court ruling that the suspension of Parliament by Prime Minister Boris Johnson. The pound has gained more than 0.4% since the start of the week to highs of 1.2479 against the dollar.



More articles

US Dollar Under Pressure On Weak Economic Data

Bill Cascade   NEW 09/10/2019 00:00:00 Forex

The US dollar is struggling for direction, having lost momentum on weak employment data. The greenback has registered impressive gains, in recent months, as other majors currencies continued to edge lower...

Buy to Open Definition, Explained in Detail with Example

Bill Cascade   NEW 08/10/2019 00:00:00 Guides

There are four types of options that are commonly used in the industry. Alongside buy to open, these include buy to close, sell to open and sell to close. Here we look at precisely what the basic definition of buy to open means, alongside offering an example of it at work. By analyzing the term further, we can provide a better understanding...

Swiss Franc Eyes Fresh Gains On Safe Haven Appeal

Bill Cascade   NEW 07/10/2019 00:00:00 Forex

The Swiss franc has lost some ground against other major currencies in recent trading sessions. For starters, it is trading at two-week lows against the Euro, which has tumbled to two-year lows in recent months. While the weakness of the Swiss franc stems from weak economic data, a bounce-back could be in the offing going forward...

Turkish Lira On The Recovery As Swedish Krona Woes Persist

Bill Cascade   NEW 06/10/2019 00:00:00 Forex

Turkey's government remains optimistic about the Lira appreciation, against the dollar, over the next three years. Economic forecasts by the finance ministry indicate the government expects the country’s economy to expand by 5% next year...

Argentines Turn To the Polls To Avert Economic Crisis And Peso Volatility

Bill Cascade   NEW 03/10/2019 00:00:00 Finance

The country is struggling with one of the highest levels of inflation at 54%. High inflation levels have affected the way of life, as prices of goods continue to rise, and small businesses struggle to remain afloat... 

Free margin - Credit