Dollar surges on worries that U.S.-China trade war will resume

LONDON (May 4) - The U.S. dollar surged against most major currencies on Monday amid fears that last year’s U.S.-China dispute will be re-ignited, this time over the novel coronavirus.

U.S. President Donald Trump and Secretary of State Mike Pompeo have pinned the blame for the pandemic on China, where the new coronavirus outbreak is believed to have originated.

The latest salvo came from Pompeo on Sunday, who said there was “a significant amount of evidence” that the virus emerged from a laboratory in the central Chinese city of Wuhan.

“This morning’s session is being dominated by risk-averse trading as investors weigh the negative consequences to global growth from another escalation in U.S.-China tensions,” said Simon Harvey, currency analyst at broker Monex Europe.

“The headlines of further tariffs and supply-chain disruptions come at a time where global growth expectations are already fragile, causing currencies such as sterling and the euro to trade on the back foot this morning despite exit measures set to be announced or implemented in their respective economies,” Harvey said.

The euro was last down 0.3% at $1.0939 EUR=EBS. Sterling was also down by 0.6% to $1.2420 GBP=D3.

The dollar was also rising against Scandinavian currencies, which are vulnerable to global trade risks. The Swedish crown was last down 0.7% at 9.9105 versus the dollar SEK=D3 and the Norwegian crown was falling by 0.6% at 10.4045 NOK=D3.

Reuters