SYDNEY (Businesshala) – The dollar eased broadly against riskier currencies and the yuan rose to a five-month high on Tuesday as talks between US and Chinese leaders got off to an amicable start, while traders were buoyed by US retail sales. The figures were awaited.
The euro also broke a 16-month low and rose nearly 0.2% to $1.1383 as it rallied on Monday amid concerns about the COVID-19 outbreak and pushback on rate hike expectations from Europe’s central bank chief. Beech licks the wounds from a drunk.
Describing US President Joe Biden as an “old friend”, his Chinese counterpart Xi Jinping said his countries should increase communication and cooperation. The two leaders emphasized their responsibility to avoid conflict in the inaugural address.
By the halfway point in talks, the yuan had climbed to its highest level since June at 6.3666 per dollar in onshore trade. The risk-sensitive Australian and New Zealand dollars also gained about 0.2%, while the safe haven yen lost a fraction.
“Xi called Biden “my old friend” and said the two countries should work together,” said Qi Gao, Asia FX strategist at Scotiabank. “Therefore, the situation should be better after the meeting,” he said, helping the yuan and other currencies, which are sensitive to the tone of US-China relations.
The Australian took a further jaw-drop from central bank chief Philip Lowe, who in a speech pushed back on market pricing for a hike as early as 2022, arguing that inflation was behind the spikes seen elsewhere. Was likely to be well behind.
The Aussie traded slightly above its 50-day EMA at $0.7368. The swap markets are still set for an increase of 100 basis points by early 2023.
The kiwi, which awaits the central bank meeting in New Zealand next week, rose to $0.7060 with a broadly positive mood in Asia. [AUD/]
The yen fell slightly against the euro and the dollar, with previous trades of 114.16 yen per dollar and 129.95 yen per euro.
sales data outstanding
US retail sales data is due by 1330 GMT and follows a survey of surprisingly weak consumer sentiment and unexpectedly strong business conditions last week, which helped boost Treasury yields on Monday.
Economists expect month-on-month growth to accelerate to 1.2% and a surprise upwards will further highlight the contrast in the Atlantic where European Central Bank chief Christine Lagarde has emphasized the fragility of the economy.
The common currency fell to a 16-month low of $1.1356 in the wake of his comments and stressed on the tightening of market sentiment and lacked chart support to around $1.12. The fall pushed the US dollar index to a 2021 high of 95.595.
“We expect the ECB to be cautious on policy in the coming months to limit recovery prospects for the euro against the dollar,” said Jane Foley, senior FX strategist at Rabobank.
“Our current forecast of $1.14 for the EUR/USD for mid-2022 looks out of date … we will revise our forecast later in the week.”
Bank of England Governor Andrew Bailey told a parliamentary committee that the gulf sent the euro to its sharpest slide against the pound on Monday as he was “very uneasy” about inflation.
On Monday, sterling was steady at 84.71 pence per euro and a fraction stronger on the dollar at $1.3433. [GBP/]
Canada’s central bank chief Tiff McCalem was even more outspoken and said “we are getting closer” to the move in an opinion piece, pushing the Canadian dollar to a four-and-a-half-year high against the euro.
Bitcoin declined from last week’s all-time high and slipped nearly 4% to a 10-day trough of $60,700 and fellow crypto ether was also below the peak and dropped 5% to $4,320.
Currency Bid Price 0357 GMT
Details RIC Last US Close PCT Change YTD PCT High Bid Low Bid
$1.1381 $1.1367 +0.12% -6.85% +1.1386 +1.1360
dollar / yen
114.1850 114.1850 -0.04% +10.50% +114.3050 +114.1400
129.94 129.74 +0.15% +2.38% +130.0700 +129.7000
0.9240 0.9246 -0.09% +4.42% +0.9257 +0.9238
1.3431 1.3415 +0.11% -1.70% +1.3437 +1.3412
1.2501 1.2511 -0.08% -1.83% +1.2517 +1.2493
0.7357 0.7348 +0.14% -4.35% +0.7368 +0.7343
Dollar / Dollar 0.7055 0.7045 +0.16% -1.74% +0.7063 +0.7040
BOJ. from tokyo forex market information