Dollar’s value drifts to monthly loss as Federal Reserve bets ease
The dollar pared last week’s losses on Monday and headed for its first monthly decline in five months as investors cut bets that higher U.S. rates will spur further gains and fears of a global recession have faded a bit.
The week ahead is packed with data that could provide clues on the outlook for global growth, US interest rates and the dollar with China’s Purchasing Managers Index numbers, state employment numbers United States and growth data from Australia, a leading resource country.
Trade is expected to be lightened through Monday as U.S. stock and bond markets close for the Memorial Day holiday.
At the start of the Asian session, the dollar was a fraction weaker against the euro at $1.0728, just above a five-week low, after falling about 1.5% against the euro. the common currency last week.
The risk-sensitive Australian and New Zealand dollars were firm after a rally on Friday, while the yen was a fraction weaker at 127.28 to the dollar.
The Aussie hovered near a three-week high at $0.7161, as did the Kiwi at $0.6536. [AUD/]
“The dollar may fall further this week. Without China’s lockdown, the global outlook would be brighter and the dollar weaker,” said Joe Capurso, head of international economics at Commonwealth Bank of Australia in Sydney.
The dollar index, which hit a two-decade high of 105.010 earlier in May, was flat at 101.660 on Monday. The British pound maintained last week’s gains at $1.2628.
The Chinese yuan held steady at 6.7210 to the dollar in offshore trade, supported by progress in virus lockdowns.
Shanghai said on Sunday that “unreasonable” restrictions on businesses will be lifted from June 1, while Beijing has reopened some of its public transport as well as some shopping malls.
Most analysts are hesitant to call the end of the dollar’s recent strength outright.
But positive U.S. consumer data and easing lockdowns in China are helping to revive hopes for global growth, which tends to support exporter currencies at the expense of the dollar.
Investors also seized on hints that the Federal Reserve, once it hikes aggressively over the next two months, could then take a breather.
“The Fed failed to validate calls for even more tightening, which led to a plateau in expectations going forward,” said John Briggs, global head of office strategy at NatWest Markets.
Cryptocurrencies remain on the back foot, and bitcoin struggled to recoup losses from a large sell-off in risky assets earlier this month. He last bought $29,333.
Bid rates for currencies at 00:36 GMT
Description RIC Last US Close Pct Change YTD Pct Highest Bid Lowest Bid
$1.0732 $1.0736 -0.03% -5.59% +1.0740 +1.0727
127.2100 127.1000 +0.20% +10.72% +127.3300 +127.3500
136.52 136.42 +0.07% +4.77% +136.6300 +136.4000
0.9578 0.9574 +0.04% +5.00% +0.9583 +0.9571
1.2624 1.2628 +0.00% -6.62% +1.2634 +1.2625
1.2720 1.2722 -0.03% +0.59% +1.2728 +1.2715
0.7162 0.7160 +0.07% -1.43% +0.7166 +0.7149
Dollar/Dollar 0.6534 0.6539 -0.07% -4.54% +0.6540 +0.6524
Spots of Europe
BOJ Tokyo Forex Market Information
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