Dollar rises on renewed US-Sino tensions, jobs data eyed

LONDON: The U.S. dollar rebounded whilst other major currencies weakened on Friday after President Donald Trump took steps to ban transactions with the Chinese owners of two popular mobile apps. Trump issued on Thursday an executive order banning transactions with ByteDance, the Chinese company that owns the video-sharing app TikTok, and with Tencent Holdings Ltd, which owns the WeChat messaging app.
The U.S. dollar strengthened despite the fact that employment data in the United States was expected to come in weaker, but with expectations being so low, any surprise to the upside would push the dollar higher, analysts said.
“What matters now for currencies is still the economic outlook,” said Esther Maria Reichelt, currency analyst at Commerzbank, adding that key is still which countries are emerging after coronavirus as winners.
“It’s easy for the U.S. dollar to find reason to appreciate again,” Reichelt said.
Non-farm payrolls due later on Friday are widely expected to show U.S. jobs creation slowed in July from the previous month, indicating a resurgence in coronavirus infections is undermining the economic recovery there.
The euro retreated from its highs and last traded down 0.3% at $1.1845, while the British pound also fell 0.2% to $1.3115.
Other major currencies also weakened against the dollar, with the Japanese yen the only outlier, last trading flat at 105.58.
The Australian dollar fell, hurt by concerns about worsening U.S.-Chinese relations and the Reserve Bank of Australia’s downbeat assessment of the local economy. It was last down 0.3% at 0.7220.
The U.S. dollar is rebounding from a persistent sell-off in recent weeks due to a combination of rising U.S. coronavirus infections, a steady decline in Treasury yields, and a lack of consensus in Washington over additional fiscal stimulus.
But the resurgent dollar proved that any shift in investors’ risk sentiment could easily bring back appetite for the U.S. currency.
U.S. Republicans and Democrats have so far failed to reach an agreement on the cost of fiscal stimulus measures that many investors say is necessary to prevent the economy from losing more momentum.