Greenback slips from 2-decade highs; yuan falls on weak China information

US greenback banknotes are displayed on this illustration taken, February 14, 2022. REUTERS / Dado Ruvic

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NEW YORK, Might 16 (Reuters) – The US greenback index was decrease on Monday after hitting a 20-year peak final week, with the worldwide economic system in focus after weak financial information from China highlighted worries concerning the prospects for a worldwide slowdown.

Making a risk-off temper on Monday, China’s retail and manufacturing unit exercise fell sharply in April as intensive COVID-19 lockdowns confined staff and shoppers to their houses. However Shanghai did set out plans for the return to extra regular life from June 1. learn extra

Following the discharge of China’s information, Bipan Rai, North America head of FX Technique at CIBC Capital Markets, stated buying and selling was centered on macro financial information on Monday.

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“It is vital to focus on that the dangers are in the direction of a stronger greenback and primarily, that is as a result of when you take a look at the macro financial local weather, the basics do not look good. From a risk-off perspective that ought to nonetheless assist the greenback in opposition to most currencies , “Rai stated.

However he stated the dollar was consolidating after its latest power and that extra range-bound buying and selling classes had been potential: “It is sensible for some interval of consolidation earlier than the subsequent leg increased.”

Buying and selling within the greenback could also be muted partly as a result of plenty of dangerous information has already been priced in but additionally as a result of traders are ready for occasions such because the US retail gross sales information launch and a public look by Fed Chair Jerome Powell each scheduled for Tuesday, in accordance with Mazen Issa, senior FX strategist at TD Securities. [nL2N2X52F6]

Nonetheless Issa stated he does not “suppose we’re in a market the place we will see the greenback weaken … It should take loads to get traders out of the greenback.”

The euro was pulled from its earlier lows after European Central Financial institution policymaker Francois Villeroy de Galhau stated the widespread forex’s weak spot may threaten the ECB’s efforts to steer inflation in the direction of its goal. learn extra

The Australian greenback, which is extremely uncovered to the Chinese language economic system, reversed course because the day wore on and was final up in opposition to the greenback after falling as a lot as 0.9%.

The greenback index was final down 0.37% at 104.16, after briefly crossing the 105 degree on Friday – its highest degree since December 2002, after six successive weeks of positive aspects. Weekly positioning information confirmed that traders had constructed their lengthy greenback bets.

The euro was up 0.26% at $ 1.0438 however not removed from final week’s low of $ 1.0354, its lowest degree since early 2017. Analysts see $ 1.0340 as an important degree of euro assist.

HSBC strategists count on the euro to fall to parity in opposition to the greenback within the coming yr. “A lot weaker progress and far increased inflation go away the ECB dealing with one of many hardest coverage challenges in G10 (central banks),” they stated.

Crypto markets, which commerce across the clock, had a quiet weekend after turmoil final week pushed by TerraUSD, a so-called stablecoin, which broke its greenback peg. An affiliate of the corporate behind TerraUSD stated it had spent the majority of its reserves attempting to defend its greenback peg and would use the rest to attempt to compensate some customers who had misplaced out. learn extra

Bitcoin was final buying and selling at round $ 29,881, down greater than 4%, after having dropped to $ 25,400 on Thursday, its lowest mark since December 2020.

Foreign money bid costs at 3:03 PM (1903 GMT)

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Extra reporting by Saikat Chatterjee in London, Alun John in Hong Kong; Enhancing by Barbara Lewis, Paul Simao and Chizu Nomiyama

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