Dollar Steadies against Euro; Yuan Slips On US-China Tensions

By Staff, Agencies

The dollar steadied against the euro Wednesday even as the common currency remained supported by news of a proposal for an economic recovery package to help the euro zone region recover from the coronavirus pandemic.

The euro was about flat against the dollar at $1.0979, after rising as high as $1.10315, its strongest since April 1. The common currency gained 0.8% on the greenback Tuesday.

The European Union's executive unveiled a 750 billion euro [$825.23 billion] plan on Wednesday to prop up economies hammered by the coronavirus crisis, hoping to end months of squabbling over how to fund a recovery that has exposed faultiness across the 27-nation bloc.

"An overnight rally helped the euro finally break above key psychological resistance," said Joe Manimbo, senior market analyst, at Western Union Business Solutions in Washington.

"Still, deep divisions remain among EU nations about the strings attached to the aid, a factor that could limit euro gains," Manimbo said.

The euro has struggled since falling in March, when investors rushed for the safety of dollars amid increased volatility in global financial markets.

Perceived safe-haven currencies, the Japanese yen and the Swiss franc, came under pressure Wednesday as investors looked past increased US-China tensions to bet on riskier assets in the hopes of a quick rebound from the economic hit from the coronavirus pandemic.

Against the yen, which tends to draw investors during times of geopolitical or financial stress given Japan's status as the world's largest creditor, the dollar was 0.21% higher.

The greenback was up 0.39% against the franc, after Swiss National Bank Chairman Thomas Jordan said Swiss monetary policy must remain accommodative.

Worries about the US response to China's proposed security law for Hong Kong, however, kept safe-haven currencies from seeing sharper declines.

US President Donald Trump said Tuesday his country would announce before the end of the week its response to China's planned security bill for Hong Kong.

Meanwhile, the offshore yuan fell to its lowest against the dollar since September of last year, during the US-China trade dispute.