Dollar Up Alongside Rising U.S.-China Tensions

imageForex8 hours ago (May 28, 2020 11:32PM ET)

(C) Reuters.

By Gina Lee

Investing.com – The dollar ended the week with gains in Asia, with U.S.-China tensions nearing a boiling point.

Tensions have been simmering throughout the week, triggered by China’s national security laws for Hong Kong and Macau during the previous week. China’s National People’s Congress approved the enactment of the law in Hong Kong on Thursday.

U.S. President Donald Trump will announce his response to the approval at a press conference later in the day.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies gained 0.03% to 98.405 by 11:22 PM ET (4:22 PM GMT), with investors turning to the safe-have asset.

“At the moment, hopes for economic recovery are strong, but I expect this to gradually fade to increased concern about the U.S.-China relationship,” Minori Uchida, head of global market research at MUFG Bank, told CNBC.

“When that happens, there will be more risk-off trades, which supports buying of both the dollar and the yen.”

Meanwhile, the USD/JPY pair was down 0.22% to 107.39.

The USD/CNY pair gained 0.10% to 7.1521. Investors will be paying close attention to the yuan, as well as the Chinese stock market, to gauge investor sentiment ahead of the press conference.

The AUD/USD pair was up 0.11% to 0.6643 while the NZD/USD pair slid 0.03% to 0.6205.

The GBP/USD pair rose 0.09% to 1.2327, with the pound supported by broad dollar selling during the week.

Dollar Up Alongside Rising U.S.-China Tensions

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