On October 13, Tuesday, the dollar bounced back from a three-week low as market players repurchased it, particularly against riskier peers. Additionally, the Australian dollar dropped nearly a half percent. Therefore, taking an additional hit from media reports China has reduced coal imports from the country as their relations deteriorate.
But overall risk sentiment was propped up by the belief that on November 3 U.S. Election, Joe Biden former U.S. Vice President will defeat Donald Trump and push forward with a massive stimulus to shore up a pandemic-hit economy.
Additionally, the dollar index gained 0.1% and settled at 93.190, from its Friday’s near-three-week low of 92.997. At the same time, the euro dropped by 0.17% and settled at $1.1794.
After the central bank set a weaker than forecast midpoint, the Chinese yuan slipped 0.1% and touched 6.7500 per dollar. It offset any gains from robust Chinese trade data.
According to China’s central bank, on the weekend, removing reserve requirements for some international exchange forwards, connecting speculation, Beijing wants to curb the yuan’s strength.
According to Masaru Ishibashi, general manager of Sumitomo Mitsui Bank, Biden trades have been strong during the last days. People sell the USD, mostly on currencies that have suffered under U.S. President, as the yuan, the Mexican peso, or the Canadian dollar.
However, he added that if somebody thinks that Beijing is sending a message to rein in the yuan’s strength, it might make it reasonable to unwind that trade.
Mexican peso dropped 0.4% while the Canadian dollar dipped 0.1%
Moreover, the Mexican peso dropped 0.4% and settled to 21.270 to the dollar while the Canadian dollar dipped 0.1% to $1.3124 per dollar.
The yen changed little at 105.43 per dollar. Meanwhile, the Swiss franc traded at 0.9102 to the dollar, near its highest in three weeks.
Significantly, sterling traded over the critical $1.30 level as optimism for a Brexit deal offset concern about pressure on the economy from new Covid-19 restrictions British Prime Minister Boris Johnson has stated.
The pound held near its most vital levels during two weeks against the euro, which changed hands at 0.9043 pounds.
The Australian dollar fell by 0.6%. Furthermore, it settled at $0.7165, not helped by media reports China has stopped taking Australian coal shipments.
According to Rob Rennie, head of financial market strategy at Westpac, Australia appears to have been well contained by further evidence that Chinese imports of met and thermal coal have been banned. Significantly, 22% of Australian thermal coal exports went to China last year, and 28% met coal.