EUR Exchange Rate Higher on Tuesday

EUR Hit One-Week High

                The common currency’s exchange rate went up by 0.3% on Tuesday, to 1.1306 dollars, a one-week high level. Overnight, from Monday to Tuesday, EUR’s volatility increased to 10%, the highest in almost three weeks. At night shortly USD was in demand, dragging EUR/USD exchange rate to low point of 1.1233 dollars, but this turned out to be short-lived and in the morning, US was in loses. All of this thanks to USD hitting rough patch after Peter Navarro’s, the White House trade advisor, aggressive comments on the trade deal with China. Navarro stated that China trade deal was over, but later backtracked by claiming is words were taken out of context. Nevertheless, the damage was done, and USD exchange rate paid the price. Meanwhile, EUR was supported also by good news on French business activity, that rebounded more than predicted in June. It managed already to return to posting growth after months of downturn due to the lockdown cause by the Covid-19 pandemic.

China Trade Deal

                After Navarro put on alert markets and investors by his comment that China trade deal was over, on Monday he took it back, claiming that the deal continues in place. He explained that his remarks were out of context. His claims were supported by US President Donald Trump that tweeted that China deal was fully intact. Experts predicts further fallout, but Trump is said to be committed to the phase one of deal in the built-up to the election. As the bizarre situation showed, exchange rate market is very sensitive to any news on trade war and deal between China and US. Potential steps in his matter may trigger high volatility on FX market, influencing investors’ decision to buy euro or sell euros or other popular currencies.

Swinging Currencies

                Not only EUR exchange rate welcomed Tuesday with some big changes – other currencies also reported major swings versus US dollar. It was a result of investors being torn between optimistic perspective with opening of many economies worldwide and pessimistic picture of more coronavirus infections in US and second wave of pandemic feared in China. The Australian Dollar hit one-week high, just as euro did, trading up 0.3% at 0.6928 dollars. Earlier in the day it touched the point of 0.6935, highest since June 16. However, just before it had fallen sharply by 0.7%, showing quite a volatile approach. Meanwhile, the safe haven Japanese yen fell 0.2% to 107.10 versus USD, a six-day low result. The offshore Chinese yuan also reacted with loses to the words of Navarro but managed to quickly rebound and on Tuesday it traded up 0.2%, at 7.0669 per dollar. In better situation were also the Scandinavian currencies, particularly he Norwegian crown that rallied more than 1% against the US dollar and also was up in the exchange rate versus the euro – by 0.7%.