13 Oct 2020
This week, the U.S. dollar saw gains after a three-week low following news that steps are being taken to slow down the Chinese yuan from rising further.
On Tuesday, the dollar index rose 0.1% to 93.190 whereas the EUR/USD exchange rate fell by 0.17% to 1.1794. “Biden trades have been hot in the last several days, in which people sell the dollar, particularly against currencies that have suffered under Trump, like the yuan, the Mexican peso or the Canadian dollar,” experts said.
Ahead of the U.S. presidential election, traders are aware that a Biden win would impact the dollar negatively as he plans to increase corporate tax, reducing returns from investments in the nation.
Over the weekend, Beijing claimed that it will be looking at ways to curb the yuan’s strength. “But if you think that Beijing is sending a message to rein in the yuan’s strength, then it might make sense to unwind that trade for now.”
The yuan dropped to 6.7500, after falling by 0.1%. China’s central bank offset any further gains from the Chinese currency.
On the other hand, the British Pound is being traded over 1.30 against the USD following Boris Johnson’s announcement of the UK’s new coronavirus restrictions. This pushed the EUR/GBP pair close to its strongest levels in two weeks at 0.9043.