Home Forex News Chinese Yuan Leads Charge in the Risk-on Trades as USD Falls Flat

Chinese Yuan Leads Charge in the Risk-on Trades as USD Falls Flat

The US dollar suffered losses against the majority of the currencies on Thursday as rally in riskier assets such as commodities and global equities put a dent in the US currency’s safe-haven status. The Chinese Yuan rose sharply and achieved a four-month high against the much-fancied USD, thereby extending the recent gains. Investors began to increase positions in Chinese stocks in anticipation of the recovery of the 2nd largest economy in the world. However, persistent worries about the Coronavirus pandemic have kept some currency pairs in a real tight range. Still, the USD is increasingly suffering losses as investors prefer riskier bets on long-term economic growth.

It is important to note that the USD fell by 0.3% against the Euro, thereby reaching a one-month low. However, it is expected that the Euro will get a significant boost when Germany releases the export data. Germany is Euro Zone’s largest economy, and financial experts believe that shipments will rebound sharply in May from a substantial decline in the previous month. There were other setbacks in-store as USD fell to a 3-week low against the GBP at 1.2637 and it fell to a 4-month low against Swiss Franc at 0.9365.

On the other hand, the Chinese shares continued with their remarkable spree and ended up with a five-year high during the Asian season. Speculations are rife that there would be further gains in European equities and thus highlighting the enthusiasm for risk-on trades. Although the investors are keen to look at the US’s weekly jobless claims, the USD is set to remain on the back foot for some time now. The star performance of the Chinese currency is a remarkable story. Investors have successfully shrugged off the diplomatic tension between Beijing and Washington to focus on the Chinese economy and the technological sector. While the investors are thinking twice about taking big positions before the traditional season of summer holidays, analysts say that sentiments favor the further decline of the USD as investors try to look beyond the recent and sudden spike of Coronavirus cases in some of the countries.

Felicia Learned
Felicia Learned
Felicia well-known for her writing skills works as a content writer lead in our team. She also has a deep interest in forex, Finance & cryptocurrency funds and guides people dealing with a cryptocurrency exchange. She loves reading finance blogs in her free time. For any issues, you can contact her through email: felicia@forexnews.world.

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