Dollar Rallies on Renewed U.S./China Trade Tensions

USD

The dollar index which measures the greenback against a basket of major currencies bounced-off a six-week low of 94.36 as investors rushed to the safe haven on renewed trade tensions between the United States and China. Trump administration is likely to announce later today new 10% tariffs on $200 billion worth of Chinese goods. China and the United States are likely to have a new round of trade talks on September 20th. However, the additional tariffs could lead China to abandon the trade talks, as some officials said that China would not negotiate under threat. The dollar has served as a safe haven on the escalation of global trade tensions between the United States, China, Canada, and the European Union. DXY held gains during the Asian session and traded at a high of 94.98. The USDJPY traded near a two-month high of 112.17 as the U.S. Treasury yields rose to a seven-week high of 3.004.

EUR

The Euro tumbled from a three-week high against the United States dollar to erase the gains earned following the European Central Bank meeting on Thursday. The EURUSD fell from a high of $1.1721 to settle lower at $1.1624. The ECB left the monetary policy unchanged and restated that the interest rates could remain low through summer 2019. However, European currencies were supported since last week by the possibility of a Brexit deal in the coming weeks. Market participants will focus today on the August inflation data, as solid figures could support a hawkish tone by the ECB.

Metals

Gold prices ended lower for the second consecutive day and the third consecutive week as the dollar strengthened along with the Treasury yields. The gold ounce traded at a low of $1193. Gold prices remain caught in a trading range between support of $1188 and resistance of $1214. On the other hand, the silver ounce logged its lowest daily close since January 2016 on Friday where the ounce settled at $14.03.

Oil

Oil prices ended mixed after a choppy trading day. The West Texas Intermediate crude futures fell to a low of $67.92, then bounced to a high of $69.88, and settled at $68.96 whereas the Brent futures tumbled to a low of $77.35, rose to a high of $78.91, and closed at $78.10. Oil prices were affected lately by the looming U.S. sanctions on Iran and the escalating global trade tensions which could lead to a global economic slowdown. On the other hand, the energy services firm Baker Hughes reported a rise in the U.S. drilling activity where the U.S. oil rig count rose to 867 from 860.

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