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Investing.com -- The dollar is pushing toward the two-year high it hit in April in early trading in Europe on Monday, after election victories for business-friendly incumbents in Australia and India offset ongoing worries over trade relations between the U.S. and China.
The dollar has been the big winner over the weekend, rising over 1% against the greenback after Scott Morrison’s Conservatives defied the opinion polls to win parliamentary elections. Morrison immediately signalled he would cut taxes to stimulate the economy, which analysts at Nordea Markets said may push back the date of an interest rate cut by the Reserve Bank of Australia.
“Morrison’s surprise (or even miracle) victory in the election is another reason for RBA to wait and see, as his alleged tax cuts could come in handy for the Australian economic momentum,” Martin Enlund and Andreas Steno Larsen wrote, noting that RBA Governor Philip Lowe may hint at any monetary policy consequences in a speech on Tuesday.
Before then, the Federal Reserve will have ample time to signal its thoughts regarding the implications of the U.S.-China trade war for its policy outlook. New York Fed Governor John Williams and Kansas City Fed chief Esther George both pushed back against the notion that it would cut interest rates immediately if the economy slows because of recent developments. Williams is due to speak again today, as is Vice-Chair Richard Clarida and Philadelphia Fed chief Patrick Harker. They're just the warm-up act for a keynote speech by Chairman Jerome Powell, however, at 7 PM ET (2300 GMT).
Over the weekend, a number of U.S. tech companies said they had stopped supplying telecom giant Huawei components for its telecom equipment, as a consequence of last week’s ruling by the U.S. administration.
The has stablilized after last week’s slide but may face renewed pressure in the coming days as Chinese companies accumulate billions of dollars for dividend payments on their U.S.-listed stocks. Bloomberg estimated they’ll need to pay $18.8 billion in dividends by the end of August.
Elsewhere, the dollar has risen slightly against the , paradoxically, after better-than-expected growth figures for the first quarter encouraged risk appetite.
In Europe, is struggling to recover from its slump on the revival of fears over a “hard Brexit” if the Conservative Party ditches Prime Minister Theresa May in favor of a high-profile Brexiteer. It has picked up a little in response to comments by opposition leader Jeremy Corbyn appearing to move closer to endorsing a second referendum, which may reverse the decision to leave the EU.
The is likewise treading water at just over $1.1150, still waiting for an elusive improvement in Eurozone economic data and overshadowed by the looming elections to the EU parliament, which may result in further chastisement for Europe’s mainstream political parties.
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https://www.investing.com/news/forex-news/forex--dollar-edges-back-toward-2year-high-aussie-surges-1872961
2019-05-20 07:07:00Z
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