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In this illustrated photo taken on June 16, 2022, Japanese yen and US dollar banknotes are seen along with an exchange rate graph.Reuters/Florence Law/Illustration/File Photo Acquisition of license rights
SINGAPORE, Sept 7 (Reuters) – A stronger dollar pushed the yen to a 10-month low on Thursday as investors put their faith in the U.S. economy, which remains resilient amid the financial crisis, as the euro The pound remained near three-month lows. Global growth prospects are grim.
Weaker-than-expected Chinese imports and exports in August did little to lift investor sentiment, which remains hopeful of further support from the Chinese government to boost the economy and restore market confidence. I’m paying attention.
The dollar hit a new high of 147.875 yen in early Asian trading, its highest since November last year.
Dollar stabilizes at 104.82 against basket of currencies as US services sector unexpectedly picks up momentum in August, holding part of gains from previous trading after hitting six-month high .
Stronger-than-expected economic data pushed the euro to its lowest level since June at $1.0703 on Wednesday, but reversed some of that decline to $1.07295 in the last trade.
The pound fell 0.06% to $1.2500, hitting a three-month low of $1.24835 in the last trade.
“Sure[ISM]was good…so I’m thinking of a (US) recession in the short term,” said Joseph Capruso, head of international and sustainable economics at the Commonwealth Bank of Australia (CBA). “People might be a little disappointed,” he said. ). “But the Beige Book… wasn’t really that great.”
U.S. economic growth has been “moderate” in recent weeks, job growth has been “subdued” and inflation has slowed in most parts of the country, according to a Federal Reserve report released Wednesday.
“I think what’s really driving the dollar higher is not so much that the U.S. economy is doing well, but that it’s doing better than the rest of the world.”
Market prices show a nearly 47% chance of another Fed rate hike in November, but policymakers are expected to keep rates unchanged later this month, according to the CME FedWatch tool.
Conversely, Bank of England (BoE) Governor Andrew Bailey said on Wednesday that the central bank was “very close” to the end of the rate hike cycle, although borrowing costs could still rise due to persistent inflationary pressures.
Policymakers at the European Central Bank warned investors on the same day that a decision to raise rates next week was still pending, but higher borrowing costs were also an option.
“I was surprised to see Governor Bailey’s dovish comments, and I certainly feel relieved that there are only two more rate hikes,” Capruso said, referring to the central bank.
“In terms of the ECB, what we are looking at is that there is real disagreement going on between the various ECB members. It means that.”
Danger in Asia?
Thursday’s data showed China’s exports fell 8.8% and imports 7.3% in August from a year earlier, slightly above economists’ forecasts of 9.2% and 9.0% respectively.
This did little to help the Australian dollar, which is still down 0.15% to $0.6373 and the New Zealand dollar last bought to $0.58735, both slumping around recent 10-month lows.
These two antipodal currencies are often used as liquidity proxy currencies for the Chinese Yuan.
The offshore yuan edged lower to 7.3255 to the dollar, while the onshore yuan stayed near a 10-month low in previous trading.
In Japan, traders continued to monitor interventions as the weak yen struggled to advance against the resilient dollar, despite government officials stepping up warnings against a currency depreciation.
“A verbal intervention in the yen raises the question of whether actual intervention is more likely,” said Saxo market strategist Charl Chanana. “As we’ve seen in the past, real intervention rarely causes a sustained reversal of the yen’s direction.”
Reported by Rae Wee.Editing: Jacqueline Wong
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