(Reuters) The dollar rebounded on Wednesday as investors were drawn to its safe-haven appeal a day after news of the launch of a formal impeachment inquiry against U.S. President Donald Trump drove a sharp move lower in risky assets.
Increased political uncertainty and lingering worries about the state of the trade talks between Washington and Beijing at a time when global economic growth is slowing worked in favor of the U.S. currency on Wednesday.
The greenback is viewed as safe-haven due to its standing as the world’s reserve currency.
“I think that overall the dollar’s safe haven status is understood,” said Juan Perez, senior currency trader at Tempus Inc in Washington.
Meanwhile, Trump’s rhetoric on China turned harsh on Tuesday as he criticized Beijing’s trade practices during a speech at the United Nations General Assembly, feeding worries that the resolution to U.S.-China trade war remains elusive.
“There are political battles brewing on both sides of the Atlantic and with China and the U.S. not having the friendliest of tones during addresses at the United Nations, I feel like we are back at deep uncertainty,” Tempus’ Perez said.
“With little real economic growth to speak of globally, we see why the buck is stubbornly strong to end the third quarter,” he said.