The US dollar fell against the yen and the euro in late 2018 trading on Monday. Optimism regarding the global trade war between the United States and China has led to a fall in safe havens for investors. However, the US dollar remained on track to record its strongest annual performance in the last three years.
The dollar index, which measures the strength of the greenback against the basket of major currencies, fell 0.22% on Monday. The US dollar seems to be moving defensively towards the end of the year in as global stocks have risen after positive comments regarding the US-China trade from US President Trump.
Progress in the discussions on the US-China trade crisis has led to a rise in stock exchanges around the world, and has given optimistic hints about year-end trading for markets worldwide. There was also little risk when US President Donald Trump said he had a very good discussion with Chinese President Xi Jinping on Saturday to discuss the trade implications and said “significant progress” had been made.
Both countries engaged in a trade war during most of 2018, which led to a shake-up in the global financial markets. Punitive tariffs have also disrupted the flow of hundreds of billions of dollars of goods between the world’s two largest economies. The Japanese yen, which tends to profit during geopolitical or financial pressures, remained Japan’s largest creditor nation, with demand falling to a six-month low against the Japanese currency.
Tensions have bolstered demand for safe haven in the US currency this year as investors bet the United States is better off than its rivals to overcome a trade war. Year-on-year, the index rose 4.4%, the best annual increase in percentage since 2015.
While the dollar was relatively stable at the end of 2018, expensive costs, stagnant stock growth, a decline in US corporate cash-backs, and the possibility that the US Federal Reserve will not raise interest rates as many times as previously expected are a real challenge to the movements of the greenback. Many analysts believe that the US dollar may be at its peak.
On Monday, the euro rose 0.08% against the dollar. Although the single currency has risen against the dollar in recent weeks, economic growth and inflation in Europe are still much weaker than the European Central Bank’s expectations. The euro is expected to lose around 5 percent against the dollar in 2018.
The pound, which fell this year due to Brexit related issues, rose 0.31% to a three-week high. The British pound lost about 6% of its value against the dollar this year.