The US Dollar is struggling to hold onto recent gains against its major rivals in early morning trade in Asia. Safe haven currencies, which include the greenback, were back in favor on renewed concerns of diplomatic tensions between China and the United States. Several issues have heightened investors’ worries, including China’s response to the Covid-19 pandemic, as well as the country’s treatment of Hong Kong, a former British colony. Unrest by a pro-democracy faction in Hong Kong in 2019 has resulted in Beijing getting ready to enact national security legislation; the Trump administration has already said that the Chinese government should be forewarned that such legislation would result in a very strong reaction which some analysts believe would likely be the loss of favored nation status for China. As a global powerhouse, the loss of favored trading status could negatively impact the Chinese economy and its status as a global financial center.
As of 10:02 am in Tokyo, the USD/EUR was trading at $1.0948, a slight gain of 0.0068%; the pair is off the session trough of $1.09453. The GBP/USD was higher at $1.2230, up 0.0147%; the pair has ranged from a low of $1.22154 to a high of $1.22346. The USD/JPY was higher at 107.6600 Yen, up 0.01%, and moving off the session peak of 107.769 Yen.
The yen is a popular asset during turbulent times.
Japan’s CPI Misses Estimates
Earlier, Antipodean currencies bore the brunt of the pressure from the US-Sino rhetoric, but have since recovered. The AUD/USD is trading higher at $0.6553, up 0.0213%, about midway in the pair’s trading band of $0.65592 and $0.65729. The NZD/USD was lower at $0.6116, a loss of 0.0311%, off the session low of $0.61141. Remaining in Asia, the Japanese Statistics Bureau earlier released personal inflation data for April. The report shows that core CPI fell to -0.2%, missing analysts’ expectations of a fall to -0.1% from the previous reading of 0.4%; core CPI in this case strips out fresh food as a component due to its volatility.