Gold slips towards one-year lows as dollar revives

Gold slips towards one-year lows as dollar revives

Gold slips towards one-year lows as dollar revives

On Monday, China said it has no intention of devaluing the yuan to help exports, after Washington said it was monitoring the currency's weakness amid the escalating bilateral trade brawl.

The behavior of the Central Bank of China represents the beginning of a currency war.

Around 1030 GMT, London's benchmark FTSE 100 index was up 0.8 percent compared with Monday's close. The US President has no policy levers to directly influence the strength or weakness of the currency.

A weakening Chinese yuan against greenback due to concerns over trade wars may mobilize a liquidity shock, Ben May, an economist at Oxford Economics, has said.

The remarks, coupled with Trump's threats to impose tariffs on all US imports from China, triggered a bout of sell-offs in Wall Street and European stocks on Friday, despite good corporate earnings. Japan's Nikkei stumbled 1.4%, while Australian shares and South Korea's Kospi index fell 0.9% each.

The shift in focus toward easing also comes after the central bank in July released 700 billion yuan in liquidity by cutting some banks' reserve requirements, prompted by concerns over tighter cash conditions and a potential economic drag from the USA trade dispute. The European currency traded 0.1 percent down at 1.1710, having touched a high of 1.1749, its highest since July 11. The index started the year at 3,314 points and dipped the lowest level of last two years reaching 2,691 points in July.

United States crude was last off 16c at $68.1 a barrel after posting its third straight weekly loss.

Behind President Trump's claim of new funding from North Atlantic Treaty Organisation members
Trump this week reportedly floated a spending commitment of 4 percent of GDP, which is more than even the US pays. NATO Ambassador Kay Bailey Hutchison said last week that now 16 of 29 countries are on track to meet that goal.

European Union finance chief Pierre Moscovici warned that "further trade escalation conflicts would negatively affect" all the countries involved, the United States included.

Spot gold was barely changed at $1,231.8 an ounce.

The New Zealand bonds closed Monday's session on a lower note amid a muted trading session that witnessed data of no major economic significance.

The yield on 10-year Chinese government bonds CN10YT=RR ended 2.9 basis points higher at 3.562 percent. At the time of closing, the yield on the benchmark 10-year note, which moves inversely to its price, jumped almost 2-1/2 basis points to 2.83 percent, the yield on the long-term 20-year note also surged 2-1/2 basis points to 3.13 percent and the yield on short-term 2-year closed 1-1/2 basis points higher at 1.86 percent.

Shrugging off the weaker yuan, China's stock markets rose as investors cheered the prospect of policy easing and picked up bargains.

In yet another public institution that has had its supposed independence violated by the President, Trump expressed his vexation about the Fed's rate hiking policy, particularly as it relates to a strongly appreciating Dollars.

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