The United States of America dollar, on Monday, June 4, dropped to a two-week low, as the easing of political tensions in Italy lifted the euro and as global trade concerns resurfaced after China warned the United States against tariffs or other protectionist measures.
“With European political drama retreating from the brink, the peak in the dollar index was likely observed at 95,” said Mazen Issa, senior FX strategist, at TD Securities in New York.
Lingering trade disputes will also contribute to a challenging backdrop for the U.S. dollar in the weeks ahead, he added.
“The U.S. administration appears uncoordinated and unprepared with a global effort – that now includes China – throwing its hat in the ring of retaliation and withdrawal of a principled agreement to buy more U.S. goods should the U.S. decide to go through with purported tariffs later this month,” Issa said.
The official Chinese news agency Xinhua reported on Sunday that if the United States introduces trade sanctions including raising tariffs, all the economic and trade achievements negotiated by the two parties a few weeks ago will be void.
In mid-morning trading, the dollar index fell 0.4 percent to 93.850, hitting a two-week trough of 93.664.
The dollar fell on Friday despite a strong U.S. non-farm payrolls report, suggesting the greenback has been looking stretched after gaining consistently since mid-April.
Better-than-expected U.S. jobs data last week underlined the strength of the U.S. economy and the near-certainty of a Federal Reserve interest rate rise this month and probably a fourth hike this year, factors which have lifted the dollar.
