Dollar Up over Renewed Recession Fears
2022.07.06 08:47
By Zhang Mengying
Investing.com – The dollar was up on Wednesday morning in Asia as renewed recession fears sent investors to safe-haven currencies.
The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched up 0.08% to 106.62 by 1:41 AM ET (5:41 AM GMT).
The USD/JPY pair fell 0.48% to 135.21. The yen gained a little support from some safety bids.
“So far the yen is the currency of choice as it sucks in the obligatory safe-haven flows,” City Index senior market analyst Matt Simpson told Reuters.
“Yet momentum remains low relative to moves overnight, suggesting traders are erring on the side of caution without venturing into panic mode – on hopes that the dire data from Europe doesn’t lead to contagion,” Simpson added.
The AUD/USD pair was down 0.26% to 0.6784, and the NZD/USD pair fell 0.23% to 0.6153.
The USD/CNY pair edged down 0.17% to 6.7085, while GBP/USD pair eased 0.26% to 1.1925. U.K. Prime Minister Boris Johnson’s premiership tottered after the resignations of two senior UK cabinet ministers over his leadership.
The EUR/USD fell 0.22% to 1.0246.
“There’s no investment case to be long euro right here, right now. No one’s buying euros other than just as a trade,” Pepperstone head of research Chris Weston told Reuters. He pointed to a 100% rally in European gas prices in the last 16 days which he said had left the European Central Bank with a brutal juggling act.
“You’ve got high inflation which they need to raise rates towards, but you’ve got a trade deficit in Germany now and falling growth. It’s not even a matter of recession, it’s a question of how deep that recession gets and how prolonged,” Weston added.
Elsewhere, The Reserve Bank of Australia announced on Tuesday an interest rate hike by 50 basis points to 1.35%, in line with Investing.com’s expectations.
Investors now await the minutes from the Fed’s June meeting, due later in the day, which is almost certain to sound hawkish.
