The US Dollar Index (DXY) suffered its biggest weekly collapse in over a year, plunging to new multi-month lows beneath the 101.00 handle. This sell-off was largely motivated by declining yields along the US yield curve, which added to overall market turbulence. As a result of the blunted Greenback, the euro, Australian dollar and other currencies achieved significant increases. Gold and silver surged to remarkable new all time highs. This dramatic increase came despite increasing concerns about US-China trade conflicts and that they would deepen and escalate.
As indicated by the recent decline in the DXY, market sentiment appears to be turning. This legislative change is largely motivated by the continued concern over the US-China trade war. Anticipation surrounding the announcement of a substantial 145% tariff on Chinese imports has exacerbated fears of a protracted economic confrontation. Thus, the Greenback was under notable selling pressure, crashing to new depths on the week of trading. This recent decline in the dollar’s value has spurred on new efforts at trading in other currencies and commodities.
Meanwhile, the euro kept climbing against the dollar, reaching historic new heights. As a result, it pierced above the key 1.1200 level against the US dollar, sending the EUR/USD soaring over 1.5%. This increase just represented the depressed Greenback. On top of that, surging trade war fears prompted investors to flee to safer assets. The increase in the value of the euro represents a growing confidence in EU markets. They’re reacting dramatically to shifts in US monetary policy and major geopolitical crises.
The Aussie dollar picked up steam, surging to four-day highs after decisively reclaiming the 0.6200 barrier. The AUD/USD is ripping higher. Traders are shorting the US dollar, positioning as they predict more downside for the Greenback. The Australian currency continues to soar, a testament to its legacy as a safe haven currency during periods of global anxiety. It often benefits from rises in commodity prices and changes in risk appetite.
In this time, the British pound registered strong increases. It fell short of the psychological 1.3000 mark by only a few pips worth, as GBP/USD advanced in definite weekly recovery. The pound’s strength just highlights the dollar’s weaknesses. Further bullishness could come from improving US economic data points paired with positive shifts in Brexit negotiation progress. With the currency nearing this milestone, market participants are keeping a close eye out for signs that could weigh on or prop up even further moves.
The cryptocurrency Cardano settled into support at $0.62 on Thursday after a vigorous bounce the day before. This resurgence was notably triggered by former President Donald Trump’s decision to pause tariffs on certain goods for an additional 90 days, which eased some immediate trade tensions. The short-lived reprieve first gave traders a wave of optimism, giving the Cardano cryptocurrency ample time to rest after the recent volatility.
Alongside changes in currencies, gold and silver saw their prices soar beyond their typical price shocks by precious metals’ historical standards. Gold prices indeed hit a record high, approaching $3,180 per troy ounce. That boom was driven in part by an enormous drop in the value of the Greenback, but by an increasing fear of a rising trade war. Which is why investors are making a run to gold as a safe-haven asset. They are looking for relief from economic unknowns and the inflationary risks that can be caused by tariffs and other trade policy moves.
The result was silver prices spiking during this period, hitting four-day highs around $31.30 per ounce. Gold and silver are soaring through the roof. Commodities like gold and oil have always performed poorly in periods of economic uncertainty, as retreating from risk is a common tendency. The relationship between a falling value of the dollar and an increasing price of commodities is still a major market driver to watch during this period.