The dollar continues to defend itself against the safe-haven yen in Monday's foreign exchange trading, as the trade dispute between China and the United States seems to have dragged on. Since no settlement is yet to be expected, the Japanese currency is confidently taking advantage, even though the holidays in Japan and Singapore have led to not very active trading.
Political uncertainty intensified after the US President Donald Trump said on Friday that he is not ready to make a deal with China, and even questioned the September round of trade talks.
On Monday, the dollar was negative at 7.0925 yuan after the statistics of the Chinese central bank turned out to be stronger than market expectations.
This helped dispel some fears that Beijing would use its currency as a weapon in its trade war with the United States.
A week ago, for the first time since 2008, China allowed its currency to depreciate against the dollar to 7, which, according to some, offset the imposed US tariffs. The changes put pressure on the currencies of developing countries throughout Asia and gave impetus to the growth of the Japanese yen.
Goldman Sachs cut its forecast for US economic growth over the weekend, warning that a trade deal with China was becoming increasingly unlikely before the 2020 presidential election and that the risks of a recession are thereby increasing.
This week, traders' attention will be focused on Chinese data on retail sales in July and industrial production, which will assess the impact of a long struggle with the United States on domestic trade.
Market attention will also be focused on the annual US Federal Reserve System Symposium in Jackson Hole, which will take place later this week, where investors hope to get some clarity about the future interest rate.
The US dollar fell against the yen to 105.40 level, staying near the seven-month low of 105.25 reached on Friday. The euro fell to 118.16 yen, while the EURJPY pair is near the April 2017 low.
Similarly, the pound fell to depths that have not been visited since 2016 - at around 126.69 yen and GBPJPY lost more than eight yen in just two weeks.
In addition, the pound hit a two-year low against the dollar on Friday after data showed that the UK economy unexpectedly fell in the second quarter, only reinforcing the bearish sentiment about Brexit without a deal.
Sterling was trading at $ 1.2020 - not far from the lows of January 2017.
The Australian regulator lowered its estimates for a number of major currencies, as it now expects that “nothing positive will happen” on the front of the trade, at least until the beginning of 2020. The central bank expects the dollar to be generally stable amid weakening policies of other major central banks.
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