Dollar weakened in focus of Fed and China
2023.01.09 04:00
Dollar weakened in focus of Fed and China
Budrigannews.com – As traders reevaluated the path of U.S. rate hikes following last week’s jobs report and risk appetite benefited from China’s reopening of its borders, early Monday trade in Europe saw the U.S. dollar weaken.
The, which tracks the dollar against a basket of six other currencies, fell 0.4% to 103.267 at 03:05 ET (08:05 GMT), continuing Friday’s drop of more than 1%.
The aggressive monetary tightening policy is now being toned down, with a 25 basis point increase now widely anticipated in February, down from a 50 basis point increase in December.
This came after the official monthly jobs report for the United States was released on Friday. It showed that employment rose by 0.3% in December, which was lower than expected and was lower than the 0.4% increase in November.
In addition, the United States’ economy contracted in December for the first time in more than 212 years.
According to Bloomberg-compiled data from the Commodity Futures Trading Commission on eight currency pairs, bets against the dollar increased to 30,457 contracts last week, the most since August 2021.
As any sign of price pressures continuing to ease would bolster the belief that the Fed is nearing the conclusion of its most aggressive tightening cycle in decades, this puts Thursday’s December forecast in sharp focus.
The Chinese yuan reached a four-month high after the nation reopened its borders for international travel over the weekend, causing it to fall by 0.9% to 6.7748 elsewhere.
This is the biggest shift away from the country’s strict zero-COVID policy, which was a major factor in the rapid decline in economic growth over the past three years.
The data showing a 0.2% month-over-month increase in November was a boost to EUR/USD’s rise to 1.0692, up from the revised 0.4% decrease the month before.
Gained 0.6% to 1.2159, up from 1.5% on Friday. The risk-sensitive gained 0.8 percent to 0.6930.
More Dollar falls Investors think about Friday’s employment report
has yet to trade on Monday, but the Brazilian real will be in the spotlight later in the session as traders react to the news that supporters of far-right former President Jair Bolsonaro stormed key government buildings over the weekend, emulating the 2021 insurrection that took place on January 6 in the United States.
