US President Donald Trump is set to slap new sanctions on Chinese companies

As risk sentiment has deteriorated somehow on Friday, the safe-haven US dollar demand reemerged. Investors proceeded to profit-taking following the rally witnessed this week across the global financial markets, sending the greenback marginally higher. Market players react to the news about new US sanctions on China, weak US data, and hacking into US federal agencies along with the continuing rise in coronavirus infections. The lack of further progress in Brexit and US stimulus talks also weighs on investor sentiment at the end of the trading week. 

According to the latest reports, US President Donald Trump is set to slap new sanctions on Chinese companies, including the country’s top chipmaker SMIC. In total, the United States is expected to blacklist around 80 additional companies.
On the data front, US jobless claims increased to 885,000 last week, 23,000 above the previous week’s upwardly revised level, and the fourth week of increases over the past five.

On the positive side, a committee at the Food and Drugs Administration voted almost unanimously to approve the Moderna vaccine, paving its way for approval. However, this is not enough to ease the local selling pressure in stock markets.

Against this backdrop, the euro has retreated marginally from fresh long-term highs but stayed elevated within a broader uptrend while holding above the 1.2240 area. GBPUSD failed to confirm a break above the 1.3600 figure and was clinging to the 1.3500 level during the early European hours. Meanwhile, USDJPY bounced from fresh March lows below 103.00, flirting with the 103.60 region. The pair needs to get back above the 104.00 figure in order to see a more pronounced recovery amid oversold conditions.

Despite the current correction, the greenback remains on the defensive nearly across the board and could resume the decline after a short-lived breath as investors continue to bet on global vaccination and economic recovery in 2021.


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