The U.S. dollar firmed up against its peers amid an escalation in tensions between the U.S. and China after US President Donald Trump and Secretary of State Mike Pompeo accused the Chinese government for the spread of the coronavirus and threatened to retaliate against China.
After threatening China that his administration would impose retaliatory tariffs on China earlier in the week, Trump reiterated on Friday that the U.S. is considering several plans to retaliate for the spread of the coronavirus out of Wuhan, China.
Secretary of State Mike Pompeo said on Sunday that there was evidence linking China to the contagion. A report from the Department of Homeland Security says U.S. officials believe China covered up the extent of the coronavirus outbreak so it would have time hoard medical supplies.
As worries about U.S.-China tensions rose, risk sentiment waned and the dollar found its way up.
The dollar index rose to 99.57, gaining more than 0.5%.
Against the Euro, the dollar firmed up to $1.0904, gaining about 0.7% from previous close of$1.0981. The euro area manufacturing sector contracted at a record pace in April as government restrictions to limit the spread of the global coronavirus weighed on activity, final survey results from IHS Markit showed.
The final Purchasing Managers’ Index fell to 33.4 from 44.5 in March. The score was also below the flash estimate of 33.6. The score was the lowest ever recorded by the series, surpassing readings seen during the depths of the global financial crisis.
Meanwhile, Eurozone investor confidence rose marginally in May but the current situation fell to a record low due to coronavirus pandemic, survey data from the behavioral research firm Sentix revealed.
The headline Sentix investor confidence index rose to -41.8 in May from -42.9 in the previous month. Nonetheless, this was below economists’ forecast of -33.5.
Against Pound Sterling, the greenback strengthened to $1.2440, rising more than 0.4% from $1.1520.
The Japanese currency gained modest ground against the dollar, edging up to 106.72 yen a dollar, after closing at 106.90 yen a dollar on Friday.
The dollar was down slightly against the Aussie at A$0.6421 and up marginally against the Loonie at C$1.4100. Against Swiss franc, the greenback was gaining nearly 0.5% at CHF 0.9658.
A report from the Commerce Department said new orders for U.S. manufactured goods nosedived by 10.3% in March after edging down by a revised 0.1% in February. Economists had expected factory orders to plunge by 9.8%.
Orders for durable goods sank by 14.7% percent, led by a 41.3% nosedive in orders for transportation equipment, while orders for non-durable goods tumbled by 5.8%. Shipments of manufactured goods also slumped by 5.2% in March after dipping by 0.3% in February.