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US dollar sell-off accelerates as US civil unrest grows

currency-newsUS dollar sell-off accelerates as US civil unrest grows
The US dollar remained on the defensive through yesterday’s trading session as President Donald Trump’s threat to take military action against US protestors marked a significant escalation of tensions.

Meanwhile, the pound is mostly rangebound this morning, with GBP/EUR muted at €1.1236 and GBP/USD flat at $1.2602. GBP/CAD and GBP/AUD are holding steady at C$1.7009 and AU$1.8165 respectively, while GBP/NZD has slipped to NZ$1.9632.

Looking ahead, we can expect the situation in the US to continue weighing on the US dollar so long as civil unrest grows.

What’s been happening?

The US dollar continued to trend lower on Tuesday as the protests sweeping through US cities dominate headlines.

Demonstrators largely ignored curfews put in place in most cities as they continued to protest the death of George Floyd in police custody, some of which erupted into violence and looting.

This led to threats from Trump to send in the US military to ' quickly solve the problem’, something which USD investors fear could fuel further tensions.

The broad weakness in the US dollar reflected well on the euro, which alongside hopes for a sharp V-shaped recovery in the Eurozone bolstered the single currency yesterday.

Meanwhile, the Pound also found some support on Tuesday amidst the upbeat market mood, but these gains proved limited in the face of lingering concerns of a no-deal Brexit.

What’s coming up?

Turning to Wednesday’s trading session, it’s likely we could see the US dollar face further headwinds if political unrest continues in the US, especially if clashes between protestors and the authorities continue to rise.

Also influencing USD exchange rates will be the publication of the ISM non-manufacturing PMI. Will another sharp contraction place more pressure on the ‘greenback’?

For GBP investors the focus is likely to remain on Brexit, with some volatility expected as the UK and EU likely remain in a stalemate in trade talks.

Finally, movement in the euro is likely to remain limited through today’s session as data is forecast to show a spike in Eurozone unemployment in April.
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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