Dollar decide on the direction in the European session
2022.12.05 03:34
Dollar decide on the direction in the European session
Budrigannews.com – As China eased some of its strict COVID-19 restrictions, risk appetite increased, leading to a weaker U.S. dollar and a rise in the Chinese yuan to levels not seen since mid-September.
The, which compares the dollar to a basket of six other currencies, fell 0.2% to 104.350 at 03:05 ET (08:05 GMT), from 104.062, its lowest level since late June.
Over the weekend, a number of Chinese cities, including the financial center Shanghai, announced that restrictions on mobility would be lifted. This raised hopes that the country’s authorities will agree to a general relaxation of its stringent “zero-COVID” policy soon after violent protests against restrictions.
Analysts at UBS wrote in a note on Monday that “the timing of a major COVID policy change may be a bit earlier than our baseline expectation of after March 2023.”
This has increased risk appetite, as evidenced by the drop of one percent to 6.9508, which fell below the closely watched level of seven dollars per dollar and reached a two-month low.
This follows the yuan’s 1.6 percent increase last week, which was its largest weekly gain since 2005.
As traders positioned for the to ease the pace of its interest rate hikes at its final policy-setting meeting of the year later this month after four consecutive hikes of 75 basis points, the dollar had already been on the decline, falling 5% in November, its worst month since 2010.
Climbed 0.2 percent to 1.0558, having previously reached a five-month high of 1.05835 ahead of the November finals and October Eurozone data releases.
Although the Eurozone’s economy is still operating at five times the central bank’s 2% target, the European Central Bank is still expected to raise interest rates when it meets next week.
fell just short of the day’s high of 1.2345, which was its highest level since mid-June, and reached 1.2301, up 0.1 percent.
The recent decrease in tensions between the United Kingdom and the European Union under the new Rishi Sunak administration has been beneficial to sterling.
Late last week, European Commission President Ursula von der Leyen said that talks between the two parties were marked by a new, more pragmatic spirit and that a workable solution to the Northern Ireland Protocol “is within reach.”
Climbed 0.7 percent to 135.21, while the risk-sensitive climbed 0.2 percent to 0.6805 ahead of the Australian central bank meeting on Tuesday. After a sharp decline in inflation in October, markets anticipate the Reserve Bank of Australia to maintain the at 2.85%.
However, economists anticipate an additional quarter basis point increase before policymakers halt the current rate hike cycle.
