US dollar remains a safe haven despite the latest rally
US dollar went up on a new wave of risk aversion that hit the market yesterday caused by new tensions in US-China relations. Nevertheless, Wall Street entered a new rally as the containment measures around the world began to ease off.
US stocks jumped in late session. Nasdaq went up by over 1% while the heavily impacted New York announced its framework for economic restart.The process will be split in phases. Big openings in California also improved the global picture.
Oil prices went up as well, riding on the expectations of a surge in demand after the global reopenings. Nevertheless international tensions prevented US dollar and gold from losing their safe-haven status.
The US-China tensions have been sparked by US Secretary of State Mike Pompeo’s statement that he has certain “significant evidence” that COVID-19 escaped from a lab in Wuhan. President Trump also threatened to introduce new tariffs, reigniting the trade war.
Optimistic news have also been balanced by the survey covering the operations of factories in Asia and Europe. Manufacturing activity contracted further last month, reinforcing the expectations of prolonged demand and supply imbalance.