RPT-FOREX-China’s development woes increase greenback, weigh on Aussie

RPT-FOREX-China’s development woes increase greenback, weigh on Aussie

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By Kevin Buckland and Alun John

TOKYO/HONG KONG, Aug 16 (Reuters) – The safe-haven U.S. greenback hit a one-week excessive on Tuesday after weak international financial knowledge, significantly in China, reignited international recession fears and weighed on risk-friendly currencies such because the Australian greenback. .

The greenback index, which measures the buck in opposition to six main pairs, hit a peak of 106.81 in early European buying and selling, recouping all of its losses from final week, when lower-than-expected US inflation knowledge despatched to buyers away from the greenback and again in direction of threat. pleasant belongings.

The newest index rose 0.12% to 106.6.

“The US development image continues to be intact, however the total international image stays fragile, given issues about China, and that dampened risk-on sentiment and harm the Aussie and a few rising market threat currencies ,” stated Sim Moh Siong, foreign money strategist. on the Financial institution of Singapore.

China’s central financial institution unexpectedly reduce a key rate of interest on Monday to attempt to revive demand for credit score to help the COVID-19-hit economic system after a string of weak financial knowledge in July.

The Australian greenback fell 0.44% to $0.699 on Tuesday, falling again under the symbolic $0.7 stage. Australia’s shut commerce ties with China imply its foreign money is typically handled by merchants as a liquid proxy for the Chinese language yuan.

The US greenback rose as excessive as 6.84146 on the yuan traded abroad, a stage final seen in mid-Might.

The greenback’s return to security additionally harm the euro, which fell 0.18% to $1.0142, and the pound sterling, which final traded at $1.2026, fell 0.23% on the day.

The greenback was additionally up 0.3% in opposition to the opposite haven of the Japanese yen to 113.7.

The greenback index fell to 104.63 final week for the primary time since late June after falling from a two-decade excessive of 109.29 in mid-July as markets trimmed bets on continued Fed tightening and aggressive amid Fed cooling indicators. economic system and inflation.

Nonetheless, in latest days, a number of Fed policymakers have spoken of the necessity for continued charge hikes.

“Fed officers haven’t any selection however to look powerful within the face of a really, very tight labor market and inflation that’s too excessive,” Package Juckes, head of foreign money technique at Societe Generale, wrote in a analysis be aware.

“It is arduous to construct a compelling case for promoting the greenback in that world.”

(Reporting by Kevin Buckland and Alun John; Modifying by Shri Navaratnam, Simon Cameron-Moore and Jan Harvey)

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