Dollar in charge to kick start December trading

In case you missed it from the weekend: Trump weekend tweet roundup: ‘Productive’ meeting with Trudeau and a BRICS rant

Trump threatened BRICS countries that if they were to divest from the dollar, then they will be slapped by tariffs. In the end, it will just be another one of his rants. I mean, 100% tariffs? Really? But nonetheless, markets are definitely running with it a little to start the new week/month.

With the dollar having weakened into month-end last week, we’re now seeing it bounce back to start December trading. And the headline above is helping the dollar to cook.

The greenback is sitting higher across the major currencies board. EUR/USD is down 0.5% to 1.0525 and testing its 200-hour moving average of 1.0517 now. Break below that and the near-term bias shifts to being more bearish again. Meanwhile, USD/JPY is up 0.5% to 150.50 in staying away from its 100-day moving average – seen at 149.03 currently.

But perhaps one chart that broader markets should be paying attention to is the Chinese yuan. Amid Trump’s threats to the BRICS above, the currency is now down to its weakest since July against the dollar. And USD/CNY could be angling towards a stronger breakout to the upside now, which might just give the dollar an added tailwind this month.

This article was written by Justin Low at www.forexlive.com.