Forex Today: Dollar stronger amid tensions between the US and China

What you need to take care of on Wednesday, August 3:

Risk-aversion returned and benefited the greenback. Tensions arose on news of US House Speaker Nancy Pelosi's visit to Taiwan. Pelosi supports the local government against China's will,  spurring geopolitical tensions between the two major economies.

Demand for the greenback temporarily eased early in the American session but resumed following comments from US Federal Reserve officials. Chicago Fed Charles Evans noted that inflationary pressures may be broadening out and that the jobless rate could increase to around 4.25%, but considered reasonable a 50 bps rate hike in September. Loretta Mester, on the other hand, said she does not think the country is suffering a recession, adding that the labour market is in great shape. On inflation, however, she noted that it has not decreased "at all."

The EUR/USD pair fell to 1.0170, settling some pips above the latter. The GBP/USD pair also settled in the red after a failed attempt to regain the 1.2200 threshold.

The dollar also appreciated against safe-haven rivals. USD/CHF trades around 0.9560 while USD/JPY is currently at around 132.80. Gold surged to an almost one-month high of $1,787.99, ending the day with modest losses at around $1,768.

Crude oil prices, on the other hand, recovered some ground and the barrel of WTI currently stands at $94.30.

US Treasury yields ticked higher. The yield on the 10-year Treasury note currently stands at 2.573%, while that on the 2-year note jumped to 3.07%. The yield curve is now the most inverted since 2000.

Finally, commodity-linked currencies weakened against the dollar in the American session amid the sour tone of Wall Street. AUD/USD trades near a relevant low of 0.6911, while USD/CAD stands at around 1.2850.

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