By Ray Wee Singapore, June 26 (Reuters) –
The dollar suffered on Monday, but it also gained safe-haven support as concerns persisted that a prolonged cycle of monetary tightening by major central banks would further hurt the global economic outlook. The dramatic weekend’s events in Russia also alerted investors, but FX market reaction was subdued as they weighed the impact of the canceled uprising.
The euro narrowed some of its losses from last week, rising 0.05 percent to $1.0901 in Asian trading. on Friday after data showed eurozone corporate growth effectively stalled in June on the back of a severe downturn in manufacturing activity and a modest expansion in the eurozone’s dominant service sector. The single currency fell to a one-week low.
The pound rose 0.11% to $1.2730, reversing part of last week’s 0.8% decline, after a 50 basis point rate hike by the Bank of England fueled fears of a recession in the UK. Friday’s preliminary Purchasing Managers Index (PMI) showed signs of a slowdown in the UK economy this month, but inflationary pressures remained high.
Meanwhile, U.S. business activity fell to a three-month low in June, further exacerbating the contraction in the manufacturing sector, but the overall picture suggests a further boost to economic growth in the second quarter. ing. “Once again, another weak PMI data out of Europe,” said Carol Conn, currency strategist at Commonwealth Bank of Australia (CBA). “By contrast, UK and US PMI data remain fairly strong despite aggressive rate hikes.
“Aggressive monetary tightening in major economies will likely continue to weaken the global economy, supporting the safe-haven US dollar.” After that, it stabilized at 102.74 for the first time in almost a month.
Elsewhere, the yen rose more than 0.2 percent to 143.39 yen to the dollar, well short of Friday’s seven-month low of 143.87 yen. Policymakers at the Bank of Japan (BOJ)
Commenting on an early review of the yield curve control, which outlines opinions at the June meeting on Monday, the country’s top currency diplomat Masato Kanda said on the same day that officials said:
It does not exclude options to appropriately respond to excessive exchange rate fluctuations.
The yen has come under renewed pressure in recent weeks, given the Bank of Japan’s ultra-dovish stance and the stark contrast to hawkish central banks elsewhere.a lot of risk
Traders also said heavily armed Russian mercenaries had withdrawn from the southern Russian city of Rostov under a deal to halt their rapid march to Moscow, raising questions about President Vladimir Putin’s grip on power on Sunday. In response to this, we have been closely monitoring developments in Russia. The Russian ruble fell to a 15-month low against the dollar in early Monday trading.
The risk-sensitive Australian dollar rose 0.04% to $0.6682 after falling nearly 3% last week, while the kiwi, which also lost more than 1% last week, rose 0.37% to $0.6167. “Russia’s armed uprising…albeit halted, exposes the risk of destabilization from within Russia,” said Vishnu Bharasan, head of economics and strategy at Mizuho Bank. “Risk assets in general may not fare so well, especially if geopolitical risk flares up again.”
In Asia, China returned from vacation on Monday, and markets have become more wary of Beijing’s further support measures to spur a sluggish economic recovery in the country. The onshore yuan fell more than 0.5%, trailing offshore yuan, which topped 7.2 last week, to a seven-month low of 7.2199.
The offshore yuan fell 0.1 percent to 7.2214 yuan to the dollar.
(This story is not edited by Devdiscourse staff and is auto-generated from a syndicated feed.)