With signs of Shanghai reopening, FOREX-Aussie rises, safe-haven dollar and yen ease

The safe-haven dollar and the yen fell on Thursday, while the Australian and New Zealand dollars rose, after signals that Shanghai’s coronavirus lockdown was being eased, although sentiment remained fragile as world markets were falling. Shanghai will allow more businesses in some places to resume normal operations from early June, an official said, raising expectations for an end to the government’s crushing zero COVID policy that has lasted for weeks. That helped brighten the tone of a market that had been battered on Wednesday by growing fears that the Federal Reserve and other global central banks were stifling growth.

Despite the movements in the currency markets, a 1.9% decline in Asian stocks was proof that risk aversion was still on the mind, a day after the S&P 500 fell 4% and fell from 5% for the Nasdaq, said Ray Attrill, head of currency strategy at National Australia Bank. “Zero-COVID is here to stay, so for me the outlook for China is no less bleak today than it was yesterday,” he said.

The Aussie gained 0.8% to $0.7008, just above the psychologically important 70 cent level, benefiting from further support from a drop in Australian unemployment to the lowest in almost half a year. century. Overnight, the currency was down 1.1% from a high of $0.7046. The New Zealand kiwi rebounded 0.6% to $0.6334, after losing 1.1% overnight from a high of $0.6370. The preeminent safe-haven currency, the yen slipped, with the dollar adding 0.48% to 128.845 yen after falling 0.86% on Wednesday. The dollar index, which tracks the greenback against six major peers, edged down 0.16% to 103.63, after a 0.55% jump overnight that ended a streak three days of defeats.

“The macroeconomic backdrop that’s supporting the dollar, whether based on relative interest rates or risk aversion, either of those forces is going to remain in play for now, so I don’t see no significant decline from these levels” in the dollar index, he said. Weak U.S. housing data on Wednesday heightened worries about the downturn, and Fed Chairman Jerome Powell had stepped up hawkish rhetoric the previous day by saying the U.S. monetary authority would push interest rates as high as needed to stem a spike in inflation that he said threatened the foundation of the economy.

Powell’s position “makes a ‘soft landing’ difficult for the US economy given the long lags between changes in monetary policy and changes in inflation,” wrote Joseph Capurso, currency strategist at the Commonwealth Bank of Australia in Sydney, in a customer. Remark. “The darkening outlook for the US economy supports the USD and safe-haven currencies.” The euro rebounded 0.38% to $1.0501 after falling 0.84% ​​on Wednesday. The pound got a break with a 0.37% gain to $1.23905, after falling 1.2% overnight as a UK inflation spiked to a record high. 40 years raised concerns of a sharp economic downturn.

Summary of news:

  • With signs of Shanghai reopening, FOREX-Aussie rises, safe-haven dollar and yen ease
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