Abstract： The risk-sensitive Australian and New Zealand dollars retreated from near two-month highs against the greenback on Monday due to dissappointing data from China, a key trading partner, while the Chinese yuan weakened after a surprise cut in interest rates.
The safe-haven U.S. dollar bounced on Monday while commodity-sensitive currencies including the Australian dollar tumbled after a new batch of disappointing Chinese data bolstered global recession worries.
Commodities including iron ore slumped on concerns about reduced demand from China, which hurt currencies exposed to the assets, including the Australian dollar.
The U.S. dollar index gained 0.79% to 106.52. The euro eased 0.97% against the dollar to $1.0157.
The Australian dollar, which is also viewed as a proxy for global growth, dropped 1.43% to $0.7021. The New Zealand dollar fell 1.45% to $0.6363.
The offshore yuan hit 6.8197, the weakest since May 16, after Chinas central bank cut key lending rates in a surprise move to revive demand.
The dollar index has fallen from a 20-year high of 109.29 on July 14 on hopes that the Federal Reserve will slow its aggressive pace of rate increases and that the worst of inflation increases may be behind us.
Concerns that the Fed tightening will send the economy into recession has also sent U.S. Treasury yields lower.
However, Fed officials have maintained a hawkish tone and stressed it is too soon to declare victory on inflation.
“The Fed is telling us they want to tighten financial conditions and the market has eased them, so the Fed is going to have to drive home its point with a larger rate hike,” said Chandler, adding he expects the U.S. central bank to raise rates by 75 basis points at its September meeting.
Data this week including industrial production on Tuesday and retail sales on Wednesday could also “help ease fears that the U.S. contracted again,” Chandler said, which would boost the greenback.
U.S. single-family homebuilders confidence and New York state factory activity fell in August to their lowest levels since near the start of the COVID-19 pandemic, data on Monday showed.
Currency bid prices at 3:02PM (1902 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Dollar index 106.5200 105.7000 +0.79% 11.349% +106.5500 +105.5400
Euro/Dollar $1.0157 $1.0257 -0.97% -10.66% +$1.0270 +$1.0155
Dollar/Yen 133.3250 133.6100 -0.22% +15.80% +133.5850 +132.5550
Euro/Yen 135.42 136.93 -1.10% +3.91% +137.0700 +135.2900
Dollar/Swiss 0.9468 0.9411 +0.63% +3.82% +0.9471 +0.9409
Sterling/Dollar $1.2055 $1.2135 -0.66% -10.87% +$1.2148 +$1.2051
Dollar/Canadian 1.2908 1.2773 +1.07% +2.11% +1.2934 +1.2774
Aussie/Dollar $0.7021 $0.7122 -1.43% -3.43% +$0.7125 +$0.7012
Euro/Swiss 0.9618 0.9653 -0.36% -7.24% +0.9663 +0.9614
Euro/Sterling 0.8424 0.8451 -0.32% +0.29% +0.8470 +0.8420
NZ $0.6363 $0.6456 -1.45% -7.05% +$0.6456 +$0.6357
Dollar/Norway 9.7115 9.5785 +1.18% +10.02% +9.7150 +9.6040
Euro/Norway 9.8654 9.8095 +0.57% -1.47% +9.9042 +9.8188
Dollar/Sweden 10.3468 10.1833 +0.53% +14.74% +10.3497 +10.1907
Euro/Sweden 10.5105 10.4550 +0.53% +2.70% +10.5330 +10.4644
Gold against the US dollar (symbol "XAUUSD") is trading as a bullish flag with the bulls remaining bullish in their strength.
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