Investing.com – The dollar traded higher against a basket of major currencies underpinned by a tumble in sterling after EU chief Brexit negotiator Michel Barnier threatened to scrap plans for deal on a transitional period.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose 0.25% to 90.44. The dollar was set to record its biggest weekly gain in more than a year.
GBP/USD fell 0.93% to $1.3784.
Sterling came under heavy pressure as a planned meeting to discuss the UK’s future relations with the EU was cancelled reportedly due to “diary constraints.” Negative sentiment on sterling intensified as Barnier appeared to take a tough stance on Brexit negotiations, demanding that the UK apply new EU Rules in a possible transition period:
“The U.K. asked for this period,” Barnier said of the transitional deal. “If we maintain the economic status quo, we maintain the integrity of the single market and the application of the rules that are in place to all those who benefit from it.”
Brexit related developments are expected to continue to dominate direction in sterling. Action Economics said it expects that the backdrop of how Brexit evolves together with the action of other central banks concerning monetary policy will be key for sterling direction.
EUR/USD fell 0.27% to $1.2214, while USD/CAD gained 0.17% to C$1.2626 as the loonie came under pressure following data showing Canada’s labour force dropped by 88,000, the most on record.
USD/JPY fell 0.41% to Y108.28 as investors piled continued to pile into safe-haven yen amid risk-off sentiment.