Dollar and gold climb as central bank head warns of “very serious danger” to world economy

The dollar leads major currencies as traders buy into safe haven assets, such as USD, gold and even silver. It is currently 0.2% up on the euro and marginally ahead of the pound, clawing back from a position of being more than 1% down on sterling yesterday evening.

The dollar’s climb follows remarks by European Central Bank head Christine Lagarde saying President Donald Trump’s moves against the US Federal Reserve pose a “very serious danger” to the world economy.

The pound was riding high for much of Monday, at one point gaining more than 1% on the dollar and 0.4% on the euro, but that position slipped following Lagarde’s statement.

Gold hit an all-time high this morning, passing $3,500 per ounce. Whenever traders are buying this safe haven asset it’s an indication of uncertainty in the market.

It’s easy to see why: Trump is currently trying to remove Fed governor Lisa Cook, marring the central bank’s independence ahead of an interest rate decision later this month, and, later this week, the Bureau of Labor Statistics is due to publish its first batch of jobs data since Trump replaced the office’s lead official because he didn’t like the numbers it reported.

With two major institutions now potentially producing doubtful decisions, traders are looking to store their funds in safer assets.

In other news, the UK’s Nationwide Building Society and the Bank of England revealed that despite mortgage approvals rising, the amount people are borrowing is decreasing, showing that house prices fell in August.

Monday saw the euro slip against both the pound and dollar, starting Tuesday down 0.15% on GBP and 0.26% on USD. This decline was despite seeing an increase in manufacturing performance last month and a decrease in unemployment across the Eurozone Area.

Later this morning, the EU will publish new inflation data, which will show where the European Central Bank has managed to keep prices rises to its 2% target.

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