The Dollar Index, which measures the performance of the greenback against a basket of other major currencies, has been rising for the last three sessions and is approaching the 99 level. This strength can be explained by the escalation in trade tensions between the US and China, supporting the dollar which is seen as one of the go-to currencies during times of trouble through its role as a global reserve currency.
The latest chapter in the ongoing trade dispute started with the US announcing the blacklisting of several leading Chinese tech companies, with China retaliating by banning NBA games in the country. This tit-for-tat dispute is setting a negative tone for the trade talks, due to start on Thursday, resulting in a prevailing mood of risk aversion in the markets, as investors don’t believe that there will be a quick solution and the risks to the global economy will remain in place.
Photo by Robert Nyman.
