May 26, 2020 | 5:25 PM IST

G-10 currencies to be influenced with US-China trade war

The group of 10 currencies will be driven by the US-China trade war even as the economic developments in other parts of the world are likely to take a back-seat. The greenback could maintain its position of strength this year as the investors continue to flock into dollar-denominated assets.

Experts in the field say that G10 currency moves would mostly be driven by what happens in the year-long US-China trade war, over a third expected US dollar moves based on actions from the Fed would dominate FX trades for the remainder of the year. On Thursday, the dollar slipped and risky currencies flourished mid optimism the United States and China would find a solution to their trade feud. 

A currency analyst at MUFG in London Lee Hardman is of the opinion that the recent escalation in the trade war between the US and China is a dollar positive story. He said, "Without an aggressive Fed rate cut cycle in response to recession fears in the US, it is difficult to see in the near-term what will trigger a sustainable reversal of the strong dollar trend that has been in place for the last couple of years."
Similarly, senior economist at TD Economics in Toronto James Orlando  said, “The US economy seems like it’s doing fairly well, a fundamental reason to why people are in the US dollar and US dollar asset.

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