The US dollar moved lower against a basket of its major peers on Tuesday as geopolitical risks increased following a diplomatic rift between Arab states. Tradersâ anticipation for a parliamentary vote in the United Kingdom and a testimony by Federal Bureau of Investigation Director James Comey added to risk aversion mood in the market.
Saudi Arabia moved in coordination with Bahrain, United Arab Emirates, and Egypt to end diplomatic ties with Qatar on accusations that the nation supports terrorism. The four countries withdrew their ambassadors from Qatar and stopped any means of transportation to the gulf state in a serious escalation to the regionâs diplomatic rift.
The coordinated move appears to be aimed, among other things, at limiting Iranâs influence in the Middle East. However, the growing differences between the Gulf states added to geopolitical tensions that are already brewing in the region. The US dollar dropped today as traders bought the Japanese yen, which is widely perceived as a safe haven.
On Thursday, Comey will testify before a Senate committee that was formed to investigate his meetings with US President Donald Trump. Trump allegedly requested that Comey ends a probe into the ties between the presidentâs former Security Advisor Michael Flynn and Russia.
The investigation into the matter could disrupt Trumpâs economic agenda, which includes a reduction of corporate taxes and an increase of infrastructure spending. The presidentâs plan for stimulating economic growth was the main reason the US dollar rallied between November 2016 and the early months of 2017.
Thursday is also the day when the United Kingdom will hold a snap general election that was called for by UK Prime Minister Theresa May in April. The election will decide members of the House of Commons and might allow May a better ability to move swiftly with the British departure from the European Union.
Today saw a single major economic release in the United States. The Bureau of Labor Statistics said that the number of job openings rose to 6.044 million in April from 5.785 million in March, which was more than estimates of 5.650 million. The higher number of job openings came after hires declined to 5.1 million in April as less job positions were filled in the health care, social assistance, and real estate sectors.
EUR/USD rose to 1.1266 as of 15:55 GMT on Tuesday after touching 1.1274 at 13:40 GMT, the pairâs highest level today. EUR/USD began trading today at 1.1257. USD/JPY traded at 109.33 after declining to 109.26 at 15:25 GMT, the pairâs lowest level since April 21. USD/JPY started the day at 110.41.
The Dollar Index, which tracks the strength of the US currency against its major peers, declined to 96.62 as of 15:50 GMT today from 96.79 yesterday.
If you have any questions, comments or opinions regarding the US Dollar,
feel free to post them using the commentary form below.
