American Dollar Reaches One-Year Trading Highs

The American dollar has gotten to its highest value in the past year following concerns amid the American government and various business partners associated with it. Part of this is coming as the government is aiming to protect some American business functions while also keeping from being overly restrictive on what outside countries like China can invest in.

President Trump stated that he was going to block Chinese attempts to acquire American technologies. This meant that while he is not going to restrict specific investments from Chinese businesses, he is trying to at least protect American businesses.

Specifically, Trump is supporting the Congress’ issuing of the Foreign Investment Risk Review Modernization Act. This act would have expanded the powers held by the Committee on Foreign Investment in the United States. The goal is to help with keeping intellectual property in the United States from possibly being stolen by China and other international entities.

The stance being utilized is a little softer than what many other presidents have utilized in the past. It is also significantly lighter in intensity than the International Emergency Economic Powers Act of 1977. The act would let the president impose significant restrictions on China and other countries that want to invest in the United States. Still, the passage of the risk review act ensures that intellectual properties will still be kept secure even as outside organizations continue to express their interest in investing in the country.

The United States Dollar Index moved up to around 95 amid the news. The index is a measure of the currency’s performance against many other major currencies in the world. The index reached its best total in the past year, although it is still under the triple-digit range that it had been at a few years earlier.

The USD/JPY rate was at around 110 as a result of the news. This is close to the 111 high that the pair reached last month. The value of the USD/EUR went to around 0.865 while the USD/CAD rate went to 1.327. Those two pairs might have been impacted by other developments, including threats regarding immigration functions in Germany and the concerns over the retail economy in Canada.

A related development on the situation also came from the United States trade deficit declining in value. The deficit when to $64.85 billion, a drop under the $68.9 billion that had been forecasted for this time. The shrinking deficit has led to the belief that the American dollar might become more valuable and useful in the future.

The lightening of restrictions and concerns over Chinese groups potentially trying to gather American content has helped keep the American dollar in check. The potential for the American dollar to become strong is visible as the open nature of the dollar comes into play. There is also a potential for the American dollar to continue to grow amid other major international developments. Part of this includes the potential for the United Kingdom to significant adjust some of its borrowing rates as the Brexit move comes closer to being fully realized.